Long balance transfer deals back on the cards
Borrowers can pay zero interest on their debt for longer as providers are now offering 0% balance transfer deals of up to 34 months.
The top six providers now offer up to 34 months on their 0% balance transfer card deals, up from the two deals recorded at the start of the year.
A balance transfer is a type of credit card where the new provider takes on your existing debt and does not charge interest on it for a set time.
They’re aimed at borrowers who are paying interest on an existing credit card or cards and need more time to clear their debt without accruing additional interest.
However, depending on the deal, you may be charged an introductory fee.
According to business information and ratings site Defaqto, the current top six 0% balance transfer credit cards come with a fee of between 2.59% and 2.89%, but it said average fees have fallen from 2.25% in March 2020 to 2.01% now.
For those who want to avoid paying an introductory fee, the interest free period tends to be shorter for these types of cards, meaning you may start to accrue interest sooner.
The top six offer up to 22 months interest-free:
Defaqto said there are also some very long balance transfer deals with lower fees, which may be a better option for those who have a sizeable balance but will be able to clear it in 28 months or less.
Katie Brain, consumer banking expert at Defaqto, said: “As inflation reaches a 40-year high and the cost of living soars, UK household finances are being squeezed more than ever. In this environment it’s great to see there are more 30+ month deals in the market, offering consumers more choice of longer-term interest free deals, providing the opportunity to clear debts without having to pay high rates of interest.
“There are a few things to weigh up when choosing a 0% balance transfer card. The cards with the longest deals usually come with an introductory fee, which, on large balances could lead to substantial amounts of additional debt. However, you might decide this is worth it if you are looking for a longer repayment period.
“If you decide to use a balance transfer card, try and make a note of when the interest free period ends. As the saying goes; ‘time flies’ and an interest free 33 months might feel like forever, but borrowers should make it a priority to pay off the balance during the deal period as any balance left over will be subject to a costly AER, which could be as high as 34.94% (average AER is 22.32%).”