Bad news for borrowers: 0% terms fall as APR rises | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

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Published: 21/09/2017

The 0% interest market has been booming in recent years, with providers clamouring to get to the top of the Best Buys with record 0% terms. However, it looks as though the tide could be starting to turn – our latest research reveals a definite slowdown in the credit card market as 0% interest terms are cut, and at the same time, the average APR has risen to a record high.

Competition wanes

The figures, taken from the latest Moneyfacts UK Credit Card Trends Treasury Report, show that the average 0% purchase credit card term has fallen by five days in the last three months to stand at 375 days, while the number of deals available has fallen by six to 96, the lowest seen since December last year.

The dip in purchase term may not sound like a lot, but it marks a clear divergence from earlier in the year – the previous quarter (April-June) saw an unprecedented increase in average purchase term which saw it hit a record high of 380 days, so there's a clear change of direction in the sector.

This can also be seen in the balance transfer credit card sector, with the average 0% balance transfer term falling by 17 days in the last three months to stand at 643, while the number of cards offering a balance transfer deal fell by nine to 117, also the lowest seen since December last year.

This has been driven by the withdrawal of several prominent deals during the quarter, including those from Lloyds Bank, Sainsbury's Bank, MBNA and Virgin Money, all of which had some of the longest introductory terms available. Indeed, the best balance transfer card currently available comes from Barclaycard with a 0% term of 40 months, yet in July it was possible to get 43 months of 0% balance transfers, so providers are clearly becoming less active in this sector. But why?

Debt concerns

Much of it could be due to the recent focus on credit cards and unsecured loans by the Bank of England, with concerns rising over mounting household debt. The Bank revealed earlier this year that household debt had risen to its highest level since before the financial crisis, which means a lot of families could be at risk of default should another financial crisis hit.

Lenders appear to be responding to that and are reining in some of their offers as a result, forgoing competition to ensure they're still seen as lending responsibly. Unfortunately, this means that responsible borrowers could be losing out, as they now have fewer 0% deals to choose from, and shorter terms to boot.

Another side-effect of this has been an increase in average APR, with it rising by 0.1% in the last three months to hit a record high of 22.9%, driven by a combination of providers increasing rates and several cards launched with higher-than-average APRs. This means borrowers who aren't on 0% deals will need to be even savvier to prevent interest charges ramping up, and should aim to repay their credit card balance in full when the statement arrives.

All in all, it isn't overly positive for credit card borrowers at the moment, which means you'll need to work even harder to make your borrowing work for you. Check out the best 0% interest credit cards to snap up the best deals before they're withdrawn from the market, and if you'll be using credit for everyday purchases, make sure you can afford to repay the balance – and consider cashback or reward credit cards for even more benefit.

What next?

Make sure your credit score is up to scratch before you apply – head to a credit check provider to get started, and if necessary, read our tips on how to improve things.


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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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