Top 0% balance transfer deal falls to shortest length for five years raising more concerns over those shuffling BILLIONS of debt around this way
- Sainsbury’s Bank now offers the longest introductory period at 29 months
- This has fallen from 43 months just two years ago
- FCA crackdown on credit card debt and consolidation in the market has been blamed for the disappearing deals
- One expert previously told This is Money that some people ‘would be in serious financial trouble if these deals were to disappear completely’
The longest 0 per cent balance transfer credit card has been slashed below 30 months for the first time in more than five years.
It prompts further concerns that those who hold as much as £31.5billion of debt this way could end up in serious financial trouble.
Sainsbury’s Bank, who until Thursday morning offered an interest-free introductory term lasting 30 months, have now cut that to 29 months.
Barclaycard’s Platinum Balance Transfer visa card is the only other option out there offering a deal of the same length.
Credit crunch: The longest 0% balance transfer deal has been cut from 43 months in February 2017 to a five-year low of 29 months. 46% of credit card debt is on cards not bearing interest
Sainsbury’s Bank charges a balance transfer fee of either three per cent or £3, whichever is greater, while Barclaycard’s fee is 1.99 per cent.
A top offer lasting only 29 months is the shortest it has been since December 2013.
Just last month, research from Moneyfacts revealed that a quarter of 0 per cent deals had disappeared in just two years, with card companies slashing the number and length of deals.
The average time a card holder had to pay off their balance before interest kicked in shrunk by 100 days, while the length of the top deal has dropped from 43 months in February 2017 to 29 months now.
Balance transfer cards have often been a popular choice for those trying to clear debts as they allow you to move your debt from an existing credit card, often charging high interest, to one charging 0 per cent for a period of time for a fee.
However, partly thanks to new rules introduced by the Financial Conduct Authority to provide greater protection for credit card customers in persistent debt, there has been a consistent decline in the length and number of interest-free deals available.
Andrew Hagger, of personal finance site Moneycomms, previously told This is Money: ‘Some people have become reliant on 0 per cent card borrowing to help them keep their heads above water and would be in serious financial trouble if these deals were to disappear completely.’
His comments appear particularly concerning in light of UK Finance statistics that show that 46.7 per cent of the UK’s £67.3billion outstanding credit card debt, £31.5billion, is on cards that are not bearing interest.
This includes other cards beyond just balance transfer ones, but it still raises questions about where those with large volumes of credit card debt may turn to if introductory terms continue to shorten in the way they have done over the last year.
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS