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Published: 19/03/2019
credit cards

Interest-free purchase credit cards can be a great way for consumers to spread the cost of a large purchase, yet unfortunately, it seems they now have less time in which to repay the debt, with providers cutting terms across the board – meaning that the average interest-free purchase term has fallen to the lowest level seen in two years.

That's according to the latest quarterly Moneyfacts UK Credit Card Trends Treasury Report, due to be published later this week, which shows that the average interest-free term on purchases has fallen to 335 days, down from 356 a year ago and the lowest seen since March 2017 (316 days).

This marks an ongoing trend with credit card providers, many of whom are reducing the terms offered on their introductory 0% deals. Virgin Money, Santander and Post Office Money, for example, all made cuts to their terms in the last quarter, some by as much as 20 months, which has had a dramatic impact on the overall average. However, it is the slight adjustments to the top cards in the market that pose a greater threat, as other top players could well follow suit in response.

The table below highlights the changing market in more detail. Not only has the average 0% term fallen, but the number of interest-free deals has seen a sharp downturn, too, with this sector of the market becoming increasingly stretched.

Credit card deals

Mar 2017

Mar 2018

Jan 2019

Mar 2019

Longest introductory 0% purchase credit card

Halifax – 0% for 30 months

Sainsbury's Bank – 0% for 31 months

Santander – 0% for 30 months

MBNA – 0% for 28 months

Average interest-free purchase term (days)





Number of introductory interest-free purchase deals





Source: Moneyfacts Treasury Reports

"The credit card market is clearly undergoing a spate of reductions across interest-free terms," said Rachel Springall, finance expert at "The cuts are likely set to continue, but the severity does depend on how long the market-leaders are able to sustain their offers. As we have seen countless times, any significant card withdrawals or reductions can create a domino effect if their counterparts are inundated with applicants.

"Indeed, during a period of economic uncertainty, borrowers may well turn to 0% introductory purchase credit cards not just for high-cost goods, but also as a way to cover any financial emergencies. The fact that the length of the average interest-free period has fallen to a two-year low will therefore be hugely disappointing."

At one time, terms of 30 months and above were commonplace, but those days have come to an end. As it stands, the longest 0% purchase term available stands at 28 months, and even then there are only three cards to choose from, with Post Office Money recently slashing its 28-month deal down to just eight months. This essentially means that consumers have less choice when they're looking to chase down the top deals, and means it's even more important to compare the options available.

"It can be sensible for borrowers to consider one of these cards, particularly as they can get over two years' breathing space on their debts," said Rachel. "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*." Yet if they put that same purchase on a 0% card, they wouldn't have to pay any interest whatsoever – as long as they cleared the balance in full before the interest-free period ends – which could make all the difference to household finances.

However, those looking to take advantage of the top deals that are still available may want to be quick, as if the latest trend is anything to go by, they may not be around for long. Rachel concludes: "If consumers are waiting for better deals to surface in this sector they may be waiting some time, as it doesn't appear that any card providers are prepared to offer a deal sitting way above the leaders. To avoid disappointment, customers may want to apply sooner rather than later, before terms get even shorter."

*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 3 years and 4 months to pay back, costing £970 in interest over this term.


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