Conversations around last week's base rate rise may be primarily focused on what it means for savings and mortgage rates, but what about when it comes to credit? Unfortunately, it could have a knock-on effect on this sector of the market as well, and already, providers appear to be scaling back their 0% interest deals, with some raising standard purchase rates at the same time.
Our data shows that several providers have scaled back their offers in the week since the base rate hike was announced, continuing the gradual decline of record-breaking 0% terms in recent months. Indeed, six months ago it was possible to secure a 0% balance transfer term of 43 months, yet now the best in the market comes in at 39 months. Things aren't quite so clear-cut in the 0% purchase sector, at least in terms of the longest deals, but the average term has still declined compared with six months ago.
The table below highlights the changes in more detail (it's worth noting that the average figures were compiled at the start of this month, before the base rate announcement, so could change further in the weeks ahead):
It's particularly telling that several of the top deals in the credit card market have been cut back and even withdrawn in the last seven days, with a lot of those changes coming from some of the biggest players in the market.
This includes Tesco Bank, who's reduced the introductory balance transfer term on its Clubcard Credit Card for Balance Transfers to 38 months (previously 39), while Lloyds Bank has reduced the term on its leading credit card to 36 months (previously 37) and raised its standard purchase rate to 19.9% APR, up from 18.9%, which means those who aren't benefiting from a 0% deal could end up paying more interest.
Similarly, Halifax has cut its top balance transfer term to 37 months (previously 38) and has also halved its 0% purchase term to three months, while upping its standard purchase rate to 19.9% APR. Bank of Scotland has done the same, shortening its balance transfer term by a month and halving its purchase term, while raising its standard APR at the same time.
MBNA has made several significant changes to its product range, including withdrawing its 30-month 0% interest credit card and replacing it with a card boasting 28-month introductory terms instead, and it also withdrew no less than 12 of its popular reward cards earlier this week.
Given that the terms on even the best 0% interest credit cards are starting to shrink, now could be the time to make your move if you want to shift debt or make that all-important purchase without paying any interest. After all, there are still some lengthy deals available, and while the dizzy heights of 43-month 0% interest terms may now be a thing of the past, you can still easily find a deal that gives you over three years in which to repay your debt, and two-and-a-half years to clear a major purchase.
Start by checking your credit score to make sure you stand a decent chance of being accepted before you apply, then compare the top 0% credit cards to get an idea of what's out there. To help, here are a few of the best 0% deals currently available:
Information and rates correct as at 10.11.2017
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.