Save, make, understand money

Credit Cards & Loans

Interest-free balance transfer deals hit record low

Paloma Kubiak
Written By:
Paloma Kubiak

The number of 0% balance transfer deals have fallen to a record low for January and the length of offers has also shortened, data reveals.

Consumers hoping to shift their debt to a cheaper balance transfer card will be disappointed as the number of deals have fallen to the lowest level of any January since 2007, Moneyfacts data found.

There are currently 76 credit card deals with introductory 0% balance transfer terms, down from 84 last year, 99 two years ago and 122 in 2017.

The length of the longest 0% balance transfer period has shrunk from its peak of 43 months in January 2017 to just 29 months now.

And the cost of shifting debt is also on the up. Moneyfacts found that consumers would need to pay £22.80 more in upfront fees compared to 2019.

Borrowers would also need to pay an additional £12 a month to clear a £3,000 debt with the longest 29-month deal, compared to if they had taken out the longest 33-month offer last year.

Rachel Springall, finance expert at Moneyfacts, said: “The start of a new year could spell a rise in demand for interest-free balance transfer credit card offers, but the number of offers has hit a record low this month.

“Lengthy offers have declined as well and today the top card has a 0% balance transfer term of 29 months (MBNA), a staggering drop of 14 months compared to the top deal in 2017 of 43 months (MBNA). In fact, based on all these interest-free balance transfer cards, borrowers have around four months less on average to pay back their debt before interest applies than they did in 2017.

“Those consumers who used a credit card to pay for some of the festive season may be looking to acquire a 0% balance transfer card, but if they do then they would be wise to make fixed repayments. For instance, someone with a £3,000 debt who paid £150 back as a minimum per month would clear the debt in 20 months, but there are cards that can default to a repayment of just 1% plus monthly interest – so their debt would hang overhead for much longer on this basis.

“Clearly, the lengthy interest-free balance transfer offers have undergone a transformation as providers changed their ranges in response to the Financial Conduct Authority’s persistent debt ruling. Consumers struggling with debt would be wise to seek advice, particularly as their card could be suspended if they have been paying more in interest and charges than the original debt.”