Interest-free terms on 0% balance transfer cards slashed – is it still worth moving debt?

Consumers looking to prepare their finances for what could be a tough winter economically, will be disappointed to see that many banks have been cutting their 0% balance transfers credit card deals.

A 0% balance transfer credit card is often a good option for those looking to consolidate or move interest-bearing credit card debt to an interest-free card, making it easier and cheaper to repay the debt. But our research has found that since July the average interest-free period on 0% balance transfer cards has fallen by 33 days, down from 553 days at the start of July to 520 days today.

“Credit card providers are tightening their 0% introductory balance transfer offers, and over the past three months over a dozen cards have seen their terms slashed,” explained Rachel Springall, finance expert at Moneyfacts,co.uk. “This movement could well be attributed to the continued economic uncertainty surrounding the Coronavirus pandemic and the subsequent impact on how much risk providers are willing to take and how consumers may be situated financially.

For those planning to transfer their credit card debt to an 0% transfer credit card the longest deal currently available in the charts is 29 months available on TSB’s Platinum Balance Transfer Card Mastercard, but as Springall reveals even this card has seen its interest-free term cut since July. She said: “At the start of July, it had offered 30 months, which was cut down 28 months and then has recently risen to 29 months. This demonstrates how important it is for consumers to act quickly if they are hoping to secure a lucrative deal.”

It is not just the interest-free period that is being cut, but some credit card providers have also increased the cost of transferring debt, as Springall reveals that “nine cards over the past three months have seen their introductory charge increased”.

Although the average interest-free period on 0% balance transfer cards have been cut significantly since July, along with the cost of transferring debt being increased on some cards, consumers with credit card debt that accrues interest will still likely be better off switching to a 0% balance credit card. Saying this, those thinking about transferring credit card debt should factor in the transfer fee when deciding whether it is worthwhile. It is also a good idea to choose a deal that has a long interest-free period to ensure that the debt can be repaid before interest is added. Comparing all the best deals on offer, which can be done easily on our 0% balance transfer credit card comparison chart, is a good way of seeing what the best options are available.

As well as this, credit scores can impact what credit card deal providers are prepared to offer, so consumers should check their credit score – which can be done for free on our credit check page – before applying for a 0% credit card deal. Springall added: “In light of the unprecedented situation the UK is experiencing right now, consumers who might feel financially strained themselves may wish to review their credit report before they apply for a credit card to ensure it has no abnormalities or missed payments, as these could go against their card application. It is vital that consumers act quickly to take advantage of the top deals as we could see more cuts in the weeks to come.”