Nearly half of 0% balance transfer credit card deals have disappeared in three years with terms also shortening
- Number of balance transfer deals fell from 122 in January 2017 to just 76 now
- The average time borrowers have to repay before interest kicks in has also fallen
- It comes as new rules introduced by the FCA in 2018 to deal with Britain’s credit card debt likely begin to bite
The number of interest-free balance transfer credit cards available has nearly halved in just three years in a potential blow for those looking to shift Christmas spending or shuffle around debt.
There were 122 balance transfer offers in January 2017 compared to 76 today, according to figures from Moneyfacts.
Meanwhile, the average length of time a cardholder has before interest kicks in has fallen from 659 days to 536 days in the same timeframe and the longest interest-free deal from 43 months to 29.
Squeeze: Balance transfer deals were once plentiful but they have shrunk amid a regulatory crackdown on credit card borrowing
Rachel Springall, from Moneyfacts, said: ‘Borrowers have around four months less on average to pay back their debt before interest applies than they did in 2017.
‘The cost to move debt is also more expensive based on the top deal on the market today compared to 2019, as consumers would need to pay £22.80 more in upfront fees.
‘Borrowers would also have to pay an additional £12 a month to clear a core debt of £3,000 within 29 months, compared to if they had grabbed the 33-month offer last year.’
Balance transfer credit cards are a staple of those trying to clear, or shuffle around, their debt and allow cardholders to move balances from one credit card to another temporarily fee-free one in return, often for a fee – but sometimes without.
However, regulators are concerned at the amount of debt consumers have outstanding on plastic.
In February 2018, new rules require credit card companies to encourage those who have been in debt for longer than 18 months to up their repayments.
Credit crunch: Some balance transfer deals have disappeared and remaining ones have shortened over the last 3 years
If that fails, borrowers may end up having interest waived or their cards cancelled.
The disappearing of balance transfer deals is a particular blow because new figures from the Bank of England suggest borrowers may be becoming savvier and getting a grip on their debts.
Figures released last week found consumers paid back £120million more than they borrowed on plastic last November, the first time since July 2013 that the value of Britain’s credit card debt pile has reduced.
Consumers repaid more credit card debt than they borrowed for the first time since 2013 in November, but the country’s plastic debt pile still sits at £72.1bn
Data shows the personal debt mountain still sits at £72.1billion, while separate figures from trade body UK Finance – which cover the UK’s biggest banks – for September found as much as 47 per cent of credit card balances could be sitting on 0 per cent deals.
Andrew Hagger, founder of personal finance site Moneycomms, previously told This is Money that some borrowers ‘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.’
The number of interest-free purchase cards available has also shrunk from 76 to 68 over the last 12 months, Moneyfacts found.
Currently the two longest balance transfer deals on the market are offered by Sainsbury’s Bank and Virgin Money.
Both cards come with a 29 month interest-free term and a 3 per cent balance transfer fee.
If you would rather trade a shorter interest-free term for a lower fee, Barclaycard’s Platinum 28 Month Balance Transfer Visa card comes with a 0 per cent term for 28 months and a fee of 1.75 per cent, while Virgin Money charges a fee of 1.45 per cent on its 27 Month Balance Transfer Credit Card Mastercard.
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