Many borrowers turn to 0% balance transfer credit cards to help them consolidate existing debt and pay down their balance without interest if it’s cleared within the set timeframe. See YourMoney.com’s Balance transfer guide for more information.

According to data site Moneyfacts, the average interest-free balance transfer period has risen to 613 days, up from 602 days in March.

The average 0% period offered by providers is also up year-on-year from 550 days and Moneyfacts said this is currently the longest seen since May 2018 (622 days).

However, it revealed average unsecured personal loan rates for £5,000 over three years, plus £7,500 and £10,000 over five years have increased in the last three months.

The average rate (APR) on £5,000 (three years) has risen from 7% in March to 7.4% in June. For £7,500 and £10,000 borrowing, the average rates have climbed from 4.4% in March to 5.2% in June.

In fact, the average rate on the loan tier £7,500 stands at its highest point in six years (September 2016 – 5.2%).

Meanwhile, purchase APRs in the three months to June have risen to an all-time high of 26.7%, according to Moneyfacts data which goes back to June 2006. It said this is due to a combination of card withdrawals, interest rate rises, fee rises, and the size of fees on new cards launched.

Rachel Springall, finance expert at Moneyfacts, explained that the loan tier £7,500 is widely used as a representative APR tier by providers and traditionally lenders would be “conscious to keep this competitive” but now stands at a six-year high.

Springall said: “During a cost-of-living crisis, the potential risk for borrowers to default is elevated, so lenders have moved to reprice in response. A few lenders that charge less than 3% remain in this space, but whether this is maintained in the weeks to come is uncertain.”

On average purchase APRs reaching a record high of 26.7%, Springall said that only two credit card providers increased their rates so the rise is more to do with card withdrawals and fee adjustments.

She added: “Clearly the assumption that base rate rises would impact credit card pricing for new customers is not the case, and in fact, there remains a healthy appetite from card providers for business, particularly on balance transfer offers.

“The biggest trend noted across the credit card market has been a rise in the average length of introductory 0% balance transfer offers. Several providers improved their terms during Q2 2022, seeing the average interest-free introductory balance transfer term rise to 613 days, the highest point since May 2018 (622 days).

“HSBC, Halifax, M&S Bank, Sainsbury’s Bank, Santander, and Virgin Money all increased 0% offers for balance transfers, a few of which hold a market-leading position. Consumers must be conscious that the longest 0% offer may not be the best for them, particularly as there are lower transfer fee options available on the market.”

It gave the average balance transfer fee as 1.95%.