Credit Card News

Over the past twelve months the average interest-free period available on 0% balance transfer credit cards has reduced by 63 days, while their equivalent purchase cards have seen a reduction of 29 days, according to data from the Moneyfacts UK Credit Card Trends Treasury Report.

According to the report, which is due to be released later this week, although interest-free terms continue to be reduced, the rate of these reductions has slowed between April and June 2019 compared to previous months.

Two credit cards currently rated as Outstanding by Moneyfacts have just announced changes to their introductory 0% interest periods.

Sainsbury’s Bank has reduced it’s introductory 0% purchase and transfer terms on its Dual Offer Credit Card Mastercard from 27 to 26 months with immediate effect. This card offers an APR of 20.9% and balance transfers are subject to a fee of 3.00% or £3.00, whichever is more. As part of the Nectar rewards scheme, customers can earn Nectar points both in Sainsbury’s and elsewhere. Applicants must be aged 18 or over and can apply for the card online or by phone.

On the other hand, in its most recent review, Halifax has increased the introductory 0% purchase and balance transfer terms from 20 to 24 months on its Online Balance Transfer and Purchase Credit Card Mastercard. The APR is 19.9%. It may be worth noting that after three months, those who wish to transfer a balance on this card must also pay a fee of 3.00% or £3 – whichever is the higher of the two. The card, which must be applied for online, requires applicants to be aged 18 or over.

These changes see both cards remain two of the most competitive currently available when compared to other credit cards offering both 0% purchase and balance transfer deals. The full range of further deals can be seen by visiting our 0% introductory balance transfer table or our 0% introductory purchase credit card chart.

The average credit card debt will take 26 years and nine months to repay if only the minimum payment is made each month, according to a report produced by The Money Charity.

Data from Money Statistics May 2019 reveals that the average credit card debt per UK household was £2,655 in March 2019 and the average interest rate on credit card debt stood at 19.87% in April 2019, which The Money Charity calculated would take over 25 years to pay off when only making the minimum monthly repayments.

When making its calculations, the charity used a formula many providers adopt when charging interest and repayment fees to credit card debt – interest, fees and charges plus 1% of the outstanding balance and often also with a flat rate of for example £5 per month – along with keeping in mind that balances and, therefore, minimum amounts reduce over time as the debt is paid off.

Commenting on the calculation, Erik Porter, acting chief executive of The Money Charity, said:

“This stark calculation shows exactly how problematic credit card debt can become if not taken on with a mindset of full understanding the product, its total costs and affordability, looking towards how it can be managed sustainably by planning and budgeting accordingly. It is essential that consumers appreciate that credit cards can be a helpful financial tool to be used wisely but mustn’t be treated as an inconsequential loan. While the calculation is an extreme one, sadly it does seem a plausible scenario for too many people.”

The reward credit card sector has been hit hard in recent years, largely the result of the EU interchange cap ruling in 2015 that limited the amount card providers could charge businesses for accepting card payments, which saw many providers cut their rewards in an attempt to remain profitable. However, our latest analysis of the market shows tentative signs of competition returning to the sector, with several providers improving their reward offerings in recent weeks.