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Consumers looking for an interest-free credit card deal will be disappointed to find that the number of 0% credit cards available is at a record low.
Figures due to be published in the Moneyfacts UK Credit Card Trends Treasury Report show that the number of introductory interest-free purchase deals has fallen to 55, down from 68 available in March 2020. At the same time, the number of introductory interest-free balance transfer deals has also fallen, down from 73 available in March 2020 to just 56 available today.
“Credit card providers act quickly when the risk to take on debts escalates and right now there is a refocus of credit card propositions to mitigate debt write-offs,” explains Rachel Springall, finance expert at Moneyfacts.co.uk. “This echoes the movements seen after the financial crash – indeed, between June 2008 and June 2009, the number of 0% purchase cards fell from 112 to 85.”
Credit card deals | June 2018 | June 2019 | March 2020 | June 2020 |
Number of introductory interest-free purchase deals | 88 | 77 | 68 | 55 |
Number of introductory interest-free balance transfer deals | 101 | 86 | 73 | 56 |
Along with a fall in the number of interest-free deals available, the average purchase rate (APR) on credit cards has risen to a record high, which is largely as a result of credit cards with reasonable rates being pulled from the market. A year ago, the average credit card purchase APR stood at 24.1%, which has risen to 25.5% today. Meanwhile, the lowest purchase APR card available a year ago offered 5.9%, whereas today the lowest APR deal on offer is 6.9% from The Co-operative Bank.
Credit card deals | June 2018 | June 2019 | March 2020 | June 2020 |
Lowest purchase APR card | Tesco Bank – 5.9% | Tesco Bank – 5.9% | The Co-operative Bank – 6.9% | The Co-operative Bank – 6.9% |
Average credit card purchase APR | 23.1% | 24.1% | 25.0% | 25.5% |
Longest introductory 0% purchase credit card | MBNA – 0% for 30 months | Barclaycard – 0% for 28 months | Sainsbury’s Bank – 0% for 27 months | Bank of Ireland UK – 0% for 24 months |
Average interest-free purchase term (days) | 360 | 331 | 314 | 282 |
Longest introductory 0% balance transfer credit card | MBNA – 0% for 36 months, 1.99% fee | Sainsbury’s Bank – 0% for 29 months, 1.50% fee | Sainsbury’s Bank – 0% for 29 months, 2.74% fee | TSB – 0% for 30 months, 2.95% fee |
Average interest-free balance transfer term (days) | 595 | 532 | 534 | 555 |
“As uncertainty builds surrounding consumer debt, this shake-up of the credit card market could not come at a worse time,” said Springall. “Consumers will have less choice when picking a 0% card for making purchases and the cost to borrow on a credit card outside of a 0% offer has risen to a record high.
“Borrowers may well use credit cards as a way to spread the cost of their purchases, but for those struggling with debt or have had their personal circumstances change in light of the Coronavirus pandemic, these debts could hang overhead for much longer then they expect.”
She added: “Those looking for a 0% balance transfer card may also need to act quickly to take advantage of the most lucrative offers as choice diminishes to a record low. The cost-saving benefits of a 0% card should not be overlooked while there are still options out there to choose from. If someone made a purchase of £3,000 on a typical credit card and made just £100 in repayments per month, the debt would linger for over three years and cost them £970 in interest*.
“In the months to come we may see the credit card market contract further, so if borrowers are in a position to do so, now may well be the time to act to get the best deal they can. To put them in the most favourable position before they apply for credit, consumers could review their credit score, such as with Experian. If consumers have any disposable income, it is a wise idea to overpay their card and consider setting aside some savings as an emergency fund for the future.”
Whether or not applicants will be accepted for a credit card deal will depend on their credit score and, as lenders become more cautious about lending, it will be harder for those with a poor credit score to borrow from traditional high street providers. As well as this, while being furloughed will not impact a credit score, lenders are unlikely to lend to those who have been furloughed.
There are some lenders who are willing to lend to those with a poor credit score and those willing to do so can be found on our bad credit loans chart . Alternatively, those looking to borrow a small amount can consider joining a credit union. Credit unions are financially regulated and predominately lend to those on benefits or who are low-income workers. More information about credit unions can be found in our What are credit unions? guide.
*Credit card repayment based on £3,000 purchase, based on an interest rate of 18.9% APR, minimum fixed repayment of £100 (thereafter a minimum of 1% plus monthly interest or £5, whichever is higher) and would take three years and four months to pay back, costing £970 in interest over this term.
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. Moneyfacts.co.uk 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.
Just over one in five Brits are planning on taking a holiday during the upcoming Queen’s Jubilee weekend, according to Barclaycard’s latest Consumer Spending Index. Of this number, 84% of respondents are planning a trip abroad. “While concerns around rising household bills may continue to hamper spending on non-essential items, the upcoming Platinum Jubilee Weekend and summer months should provide opportunities for Brits to spend on celebrations and make the most of warmer weather,” said José Carvalho, Head of Consumer Products at Barclaycard.
Just over one in five Brits are planning on taking a holiday during the upcoming Queen’s Jubilee weekend, according to Barclaycard’s latest report.
From 1 June, Buy Now Pay Later (BNPL) provider Klarna will start sharing its customers payments made on time, late payments, and unpaid purchases with credit reference agencies. This means that if a consumer falls behind on any repayments, their credit score will worsen. Equally, if a consumer repays their debts on time their credit rating will improve.
The UK’s biggest Buy Now Pay Later provider will share its customer debt and payments with Experian and TransUnion from 1 June.
There are 20.2 million UK adults who may have difficulty accessing credit from mainstream lenders according to fintech company TotallyMoney and accounting firm PWC. This is likely due to minor adverse credit history, volatile incomes which can impact affordability assessments, or minimal credit history. People who fall into this category are often referred to as “under-served.”
There are 20.2 million UK adults who may have difficulty accessing credit from mainstream lenders.
Just over one in five Brits are planning on taking a holiday during the upcoming Queen’s Jubilee weekend, according to Barclaycard’s latest Consumer Spending Index. Of this number, 84% of respondents are planning a trip abroad. “While concerns around rising household bills may continue to hamper spending on non-essential items, the upcoming Platinum Jubilee Weekend and summer months should provide opportunities for Brits to spend on celebrations and make the most of warmer weather,” said José Carvalho, Head of Consumer Products at Barclaycard.
Just over one in five Brits are planning on taking a holiday during the upcoming Queen’s Jubilee weekend, according to Barclaycard’s latest report.
From 1 June, Buy Now Pay Later (BNPL) provider Klarna will start sharing its customers payments made on time, late payments, and unpaid purchases with credit reference agencies. This means that if a consumer falls behind on any repayments, their credit score will worsen. Equally, if a consumer repays their debts on time their credit rating will improve.
The UK’s biggest Buy Now Pay Later provider will share its customer debt and payments with Experian and TransUnion from 1 June.
There are 20.2 million UK adults who may have difficulty accessing credit from mainstream lenders according to fintech company TotallyMoney and accounting firm PWC. This is likely due to minor adverse credit history, volatile incomes which can impact affordability assessments, or minimal credit history. People who fall into this category are often referred to as “under-served.”
There are 20.2 million UK adults who may have difficulty accessing credit from mainstream lenders.
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