The number of credit cards that offer a 0% balance transfer deal has dropped to record lows, according to a new report – and this could give those struggling with credit card debt fewer options.
With a 0% balance transfer credit card you can shift debt from expensive credit and store cards and freeze the interest for a set period. This gives you the chance to repay the debt faster and save money.
But research from Moneyfacts has found that the number of balance transfer cards with a 0% interest period fell from 101 in June to 87 in September.
Which? takes a closer look at how the market is changing and the best 0% balance transfer deals to go for now.
- Find out more: compare 0% balance transfer credit cards with Which? Money Compare
What’s happening to 0% balance transfer deals?
If you have expensive credit card debt on one or more cards and were counting on using a 0% balance transfer credit card to shift it, you now have fewer options than previously.
The number of products offering a 0% balance transfer promotional period has tumbled from 101 in June 2018 to 87 in September 2018 – the lowest level ever recorded by Moneyfacts, which has credit card data going back to June 2006.
Worse still, the length of the interest-free period on these types of deals has fallen from an average of 595 days to 581. At the same time, the average balance transfer fee (the one-off fee charged for each balance transfer you make) has jumped from 2.07% in June to 2.20% in September.
- Find out more: how 0% balance transfers work
Why are 0% balance transfer deals getting worse?
Credit card providers appear to be reacting to the increasing scrutiny they face over how they treat customers with persistent debts.
New rules from the Financial Conduct Authority (FCA) introduced on 1 September mean that lenders need to provide assistance if cardholders have not started making sufficient repayments on their balance after 18 months.
If a customer has been in persistent debt for 36 months, a credit card company must offer options to help them repay their debt. These might include reducing interest, fees or charges.
Rachel Springall from Moneyfacts says this seems to have ‘diluted’ lenders’ enthusiasm to offer table-topping interest-free balance transfer offers.
How will this trend impact you?
The amount of debt we have on credit cards is on the rise, and there is a chance borrowers may fail to pay off their balance before interest kicks in.
Credit card debt in the UK hit £72bn in June 2018, which amounts to an average of £2,650 per household according to The Money Charity.
Worryingly, 54.8% of credit card balances were attracting interest in July 2018, according to UK Finance.
A 0% balance transfer credit card is a great tool to help you take control of expensive credit card debt and clear it faster and for less money.
This is because all your payments go towards reducing the debt rather than covering interest, too.
For example, a £2,000 debt on a card charging 18.9% APR that you pay £60 a month towards will take 46 months and cost you £2,755 to clear.
In contrast, a £2,000 debt moved onto a 0% balance transfer card, with the same repayments of £60 a month, will take 34 months to clear and cost £2,000 – saving you £755.
If you’re struggling to repay your credit card you can find out where to get help in our roundup of free debt advice and contacts.
- Find out more: 10 tips on paying off your debts
The best 0% balance transfer credit cards for interest-free period
Our tables can be sorted by length of 0% period, size of balance transfer fee or Which? Customer Score to make it easier to find the best deal for you.
Below we’ve picked out the longest-lasting 0% balance transfer deals currently available.
Please note that the information in this table is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of the credit card provider before committing to any financial products.
|Credit card||0% balance transfer period||Balance transfer fee||Cost of transferring £2,000||Representative APR|
|Tesco Bank Clubcard Credit Card for Balance Transfers and Money Transfers||36 months||2.69%||£53.80||18.90%|
|Post Office Money Balance Transfer Credit Card||35 months||2.85%||£57||18.90%|
|Halifax 34-Month Balance Transfer Credit Card||34 months||3.00%||£60||19.90%|
|Barclaycard Platinum 33-Month Balance Transfer Credit Card||33 months||1.95%||£39||19.90%|
|HSBC 32-Month Balance Transfer Credit Card||32 months||1.40%||£28||19.90%|
- Find out more: use our balance transfer calculator to see which deal makes sense for you.