Record-low number of 0% balance transfer cards

Bad news for borrowers looking for the longest possible interest-free term to help them repay their credit card debts: the latest Moneyfacts UK Credit Card Trends Treasury Report shows not only that the number of balance transfer cards with introductory interest-free deals has fallen to a record low, but that the length of these deals is down as well.

Fewer 0% balance transfer cards

Due to economic pressures and increased scrutiny of the lending sector, the credit card market has had to adapt, and unfortunately it seems that borrowers are bearing the brunt of these changes. The biggest disappointment may be the number of interest-free balance transfer credit cards, which decreased by 14 from June to reach the lowest amount since Moneyfacts first started collecting this data in 2006.

"Credit card providers have diluted their enthusiasm for table-topping interest-free balance transfer offers over the last few months, resulting in the number of deals with this feature falling to a record low," commented Rachel Springall, finance expert at Moneyfacts. "Consumer debt on credit cards is also on the rise, so there is a greater chance that borrowers may fail to repay their balance before interest applies."

With the latest statistics showing that people now have on average only 581 days to pay back their debt, some borrowers might be feeling the strain. Despite still having more than a year and a half to pay off debt, balance transfer fees are also on the rise, which means people may have more to pay back if they get a 0% balance transfer card now compared to even three months ago.

"Worse still, most credit card balances are bearing interest [54.8% in July 2018 according to UK Finance], so if lenders continue to tighten their interest-free offers, the cost of persistent debt will only escalate further and could result in customers paying out more in balance transfer fees, time and time again," said Rachel. Those keeping a wary eye on the Best Buys might have already noticed that some of the best 0% balance transfer card deals have disappeared recently – and more could follow.

0% purchase cards more stable

Rachel found that "the average interest-free purchase term has remained relatively static, with the longest deals offering between 24 and 29 months' interest-free." However, she warned that "after the introductory terms end, they charge purchase rates of between 18.9% and 22.9% APR."

Again, those looking to make a large purchase and repay it over a number of months will want to keep an eye on the best 0% purchase cards chart, with Rachel concluding that "this consecutive tightening of the interest-free card market is likely to continue, particularly as we enter a period of economic uncertainty. Borrowers struggling to repay their balance would be wise to seek the help of debt advice charities before their debt spirals out of control."