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Credit card interest rates on the rise: how to find the best deals

Find out how to manage the cost of borrowing

Shoppers beware: while summer sales and holidays might tempt you to use your credit card more, the cost of borrowing has become more expensive. 

The average credit card interest rate jumped to 23.1% in June, up from 22.8% in January this year, new data from Moneyfacts found.

The analysis shows an increase in the average purchase and cash rates on credit cards, as well as cash withdrawal fees over the last three months.

Find out what these interest rate increases mean for borrowers and how to manage the cost your debt using 0% balance transfer credit cards.


Credit card interest rate rises continue

Credit card interest rates have risen steadily over the course of 2018.

Since January alone, the average APR has jumped three times, rising from 22.8% to 23.1% in June.

The average cash withdrawal fee has also increased over the year, climbing from 3.08% in January to 3.15% in June.

The table below shows how credit card interest rates and cash withdrawal fees have risen over the year.

Jan-18 Apr-18 Jun-18
Average purchase APR 22.8% 22.9% 23.1%
Average cash withdrawal fee 3.08% 3.12% 3.15%

These rises come at an unfortunate time when new data suggests that credit card borrowing in the UK has increased by around £3bn.

According to The Money Charity, credit card debt rose from an average of £68.08bn in 2017 to £71.1bn this year.

This means that the average household debt has risen from £2,521 to £2,613.

Managing the cost of credit card debt

If you’re carrying a credit card balance, don’t panic – you may be able to reduce the cost of your debt with a 0% balance transfer credit cards.

By transferring your balance to an different card, you may be able to pay off existing debt at at a cheaper rate or, in some cases, interest-free.

Generally, the 0% offer will be for a limited period, with some lasting up to 39 months – so, you can use the time to pay down your debt.

For example, say you have credit card debt of £2,000 on a card charging 18.9% APR and you pay off £60 a month. It would take you 46 months to clear and cost you £2,755 overall due to interest.

On the other hand, if you moved your £2,000 debt to a 0% balance transfer card, making the same £60 repayments each month, it will take you 34 months to clear and you would have saved £755 worth of interest repayments (assuming your interest-free period was at least 34 months).

Most providers will allow you to do a balance transfer from one card to another for a one of balance transfer fee – so long as you have a big enough credit limit to cover it.

Best 0% balance transfer deals

Currently the Tesco Bank Clubcard credit card balance transfers and money transfers is the best deal. It holds the longest 0% interest rate period of 36 months and the lowest APR of 18.9%.

The table below shows the top five 0% balance transfer credit card deals available right now.

Card 0% deal Balance transfer fee APR Cash withdrawal fee
Tesco Bank Clubcard credit card balance transfers and money transfers 36 months 2.69% 18.9% 24.9%
Halifax 36 month balance transfer credit card 36 months 2.68% 19.9% 19.9%
Virgin Money 36 month balance transfer credit card 36 months 2.8% 20.9% 27.9%
Lloyds bank platinum 35 month balance transfer credit card 35 months 3% 19.9% 19.9%
Barclaycard platinum 35 month balance transfer credit card 35 months 1.85% 19.9% 27.9%

Best low-interest credit cards

If you spend on your credit card but rarely repay your bill in full, a low-interest credit card for borrowing could also be a good alternative.

There are usually no annual fees on low interest-rate credit cards, which can make it easier to budget.

The table below shows the best low interest rate credit cards deals at the moment.

Card Name APR Withdrawal
Halifax Flexicard Credit Card 6.4% 6.5%
Bank of Scotland Low Rate Credit Card 6.4% 6.5%
Lloyds Bank Platinum Low Rate Credit Card 6.4% 6.4%
Barclaycard Platinum Simplicity Low Rate Credit Card 6.9% 27.9%
Save the children Platinum fixed rate charity credit card 11.9% 11.9%

Finding the right credit card

Whether you’re thinking about getting a credit card or just need a way of managing your debt, working out the cost of your standard minimum repayments is key.

Our credit card repayment calculator lets you work out the cost of your repayments which can help to plan an effective budget as well as manage your budget successfully.

Shopping around for a suitable credit card deal is also important and you can compare hundreds of offers using Which? Money Compare. 


Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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