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Published: 28/03/2019

The interest-free credit card market has seen a definite slowdown in recent months, with reduced competition between providers resulting in 0% terms being cut across the board – which means borrowers now have less time to repay their debts. Unfortunately, our latest data shows that balance transfer card terms have been hit once again, so those looking for a lengthy term to clear their debts may want to act fast!

Ongoing decline

Just last month we reported on the drop in balance transfer terms, but in a matter of weeks, things look even bleaker for borrowers. In February, the longest 0% balance transfer deal stood at 32 months, yet it's now been slashed to just 29 months, and several providers that were once market leaders have been reducing their offers to below that level.

For example, just yesterday Barclaycard reduced the term on its Platinum Balance Transfer Visa from 29 months to 28 months, following the lead of Virgin Money earlier in March. Last week Sainsbury's Bank cut the term on its market-leading Balance Transfer Card Mastercard from 30 months to 29 months, though even this means it still takes the joint-top position in the balance transfer chart.

In fact, the only positive change that we've seen in the market recently comes from Halifax, who increased the interest-free term on its card from 28 months to 29, seeing its newly-named 29 Month Balance Transfer Credit Card Mastercard take pride of place among its peers.

Yet the fact that the longest term available has fallen by three months in a matter of weeks remains telling, highlighting the ongoing decline in the sector. Looking further back reveals an even starker trend – this time a year ago, the top deal available came from MBNA with a 36-month interest-free term, while two years ago both MBNA and Halifax offered the longest-ever term of 43 months, equating to a reduction of 14 months in just two years.

Wider trend

Taking a look at average figures shows that the reductions haven't just been confined to the top of the market, either. Indeed, according to the latest Moneyfacts UK Credit Card Trends Treasury Report, the average 0% balance transfer term has fallen by 30 days in the last three months to stand at 539 days, the shortest term seen since July 2015 and a sharp downturn from the high of 669 seen in February 2017.

Not only that, but the size of the balance transfer market as a whole continues to contract, declining by almost a fifth over the past year: there are now just 80 credit cards offering a balance transfer deal, a drop of 20 from April 2018 and well below the peak of 138 seen in February 2007.

This highlights the continued downturn in the market, and if the more recent activity in the Best Buys is anything to go by, it doesn't look as though the pattern will change anytime soon. This all means that, if you want to take advantage of the best 0% balance transfer deals available, you may want to act sooner rather than later.

There's no telling how long providers will keep their offers on the market, and if you've maxed out a credit card or two, you'll likely want as long as possible to repay the balance. This ensures you'll be able to break your repayments down into affordable monthly instalments, giving you the best possible chance of repaying the full amount before the interest-free period comes to an end. Just make sure your credit score is up to scratch before you apply, then check out the best 0% balance transfer deals to get started.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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