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Consumers have less time to pay back the debt they owe on 0% interest rate credit cards than they did 12 months ago.
Research carried out by Moneyfacts.co.uk reveals that the longest deal today on 0% introductory balance transfers currently stands at 32 months, this a drop of five months since this time a year ago when the longest term offered was 37 months.
While the 0% transfer term has fallen, the cost of moving debt remains low as the balance transfer fees to do so remain relatively stable. The Post Office Money Credit Card offers 0% for 32 months with a fee of 2%, so on a £3,000 debt for example, this would cost £60. There are interest-free balance transfer cards available that don't charge a fee, but they have shorter repayment terms – so it's worthwhile for consumers to weigh up all the deals before moving debts.
This fall in 0% transfer term could be influenced by the Financial Conduct Authority recommendation last year that lenders encourage customers to pay back debts faster to help discourage consumers' reliance on debt. And, despite the decrease in the repayment term, the three best deals still give consumers more than two years to pay back their debt at 0% interest, meaning that these cards remain a good way for consumers to manage and pay off credit card debts.
"As with any credit card debt, borrowers would be wise to make every effort to pay more than the minimum repayment if they can afford to do so," said Rachel Springall, finance expert at Moneyfacts. "By fixing a regular monthly payment, customers can get out of debt more quickly, and hopefully pay off their balance before interest applies. If borrowers fail to shift their debt before their interest-free offer has expired, they might have to pay another fee to make another balance transfer elsewhere if they want to avoid interest charges."
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