As the Christmas credit card bills start to come in, now might be a great time to switch to a 0% balance transfer card. In the past, January has seen stiff competition in the balance transfer credit card market. Unfortunately, this year does not continue that trend, with only two card providers having improved or launched interest-free balance transfer offers.
Last year, seven providers improved or launched 0% balance transfer offers, including market-leading terms that gave lenders 43 months interest-free to pay off their credit card debt. In contrast, the longest interest-free balance transfer term available today sits at a lesser 38 months, offered by Barclaycard, MBNA and nuba.
"It seems that the usual boom in interest-free credit card offers has gone a bit stale this year, with very few tantalising offers propelled onto the market to choose from," said Rachel Springall, finance expert at moneyfacts.co.uk. However, looking farther back reveals that the deals on offer today are much better than those available 10 years ago, with the longest interest-free term in January 2008 sitting at just 15 months.
The longest introductory 0% interest term on purchases stood at 15 months in 2008 too. It has since taken a slightly different journey, though, with every January seeing a slightly longer introductory term. As a result, the longest interest-free purchase term now stands at 31 months, up from 29 months last year (both deals offered by Sainsbury's Bank).
However, this month has only seen one card provider improve its interest-free offer on purchases, namely Santander, whose improved offer can be found in the cashback card chart, as it offers not only 30 months on both purchases and balance transfers, but also cashback rewards. This is compared with four providers who improved or launched 0% purchase offers a year ago.
"January is a time for sales and any consumers looking to take advantage of these could turn to a 0% purchase credit card to spread the cost," Rachel said. "Once again, unlike last year, not many providers seem to be pushing new deals. So, while it remains to be the case that consumers have a wide choice of 0% deals, devotion to interest-free offers and competition for the longest terms could well be diminishing among lenders."
Rachel continued to explain that "Instead of offering the longest terms ever seen, providers are competing in other ways, such as by reducing their balance transfer fees." There's therefore no reason to panic just yet if you're looking for a competitive card to help you pay off your debts.
"The market has definitely shifted over the last decade to provide borrowers with a bit of breathing space for their debts, but consumers must ensure they do not use these offers as a crutch for their debt," warned Rachel. "Striving to make overpayments by sticking to a repayment plan and cutting up excess credit cards will help consumers who can't fight the urge to spend.
"Willpower can be a problem for those consumers struggling to repay their card debts, so they should seek financial help if they can't cope. Shredding credit card offers that land on the doormat and sending online card offers to junk-mail could be another way to fight the enticement, but if there is an absolute need, then borrowers should be checking the Best Buys instead of succumbing to marketing ploys."
Before applying for any credit card, remember to check your credit score to make sure it's up to scratch. You won't be eligible for the top deals otherwise.
Once you have a 0% interest card, make sure to keep up with your minimum monthly repayments so you don't jeopardise your interest-free deal.
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.