Compared to the mid-way point of 2022, the average 0% balance transfer period on credit cards has fallen from 21 to 17 months for households searching for a deal now.

Meanwhile, the longest 0% balance transfer period on offer has fallen from 34 months to 30 months since October.

The analysis, by consumer champions Fairer Finance, highlights a concerning trend which it says has been getting steadily worse since the latter half of last year.

Oliver Crawford from Fairer Finance said: “It’s definitely worrying that 0% balance transfer deals are getting worse at a time when interest rates and the cost of living are rising.”

Over the last 12 months, 12 credit card providers have reduced their longest balance transfer offers.

Tesco Bank has made the biggest cut to its payback period, slashing it from 33 to 22 months. Natwest and Halifax have chopped 10 and 9 months from their longest balance transfer deals respectively. NatWest now offers a maximum term of 23 months while Halifax gives card holders 25 months to repay their debt.

Barclaycard is leading the table of longest payback periods with a maximum offer of 30 months which has remained unchanged. Neither Bank of Scotland or Nationwide have seen cuts to their longest terms since last October but both providers already offered 22 months or less.

Crawford added: “Lenders may well be cutting 0% periods because of rising interest rates and because they’re increasingly worried that borrowers might default, as a result of mounting pressures on their personal finances.”

He added: “We would always encourage borrowers to repay their transferred debt entirely during the 0% period, otherwise they’ll face a much higher APR, usually over 20%.”

Clearer conditions needed from providers

If borrowers do miss a repayment it could result in them losing their 0% period entirely.
Fairer Finance is calling on providers to make this as clear as possible when if this one of the terms of their credit card contract.

It also want providers to do more to explain that 0% balance transfer cards generally are not suitable for making purchases or cash withdrawals, which will usually accrue interest until the entire balance transfer is cleared.

Crawford added: “There’s certainly more providers can do to inform customers about the benefits and downsides of 0% balances transfer cards, since it isn’t always clear when you’re applying.”