Top Credit Card News

Derin Clark

Derin Clark

Online Reporter
Published: 16/01/2020

Figures released by UK Finance today show that consumers have reduced the amount spent on credit cards year-on-year, while debit card spending has increased.

According to the figures, during October 2019 consumers spent a total of £16.6bn on credit cards, which was a 2.7% drop on the total spent during October 2018. UK Finance also found that credit card debt grew by 3.3% during October 2019, which, although is a rise in debt, is significantly down from its recent peak of 8.3% at the start of 2018.

With many consumers facing high credit card bills after the festive period, along with the news that interest-free balance transfers deals are at a record low, we’ve analysed whether there are any 0% transfer deals worth applying for and how to choose the best one.

Consumers relying on interest-free balance transfer cards to pay off their credit card debt will be disappointed to find that the number of interest-free balance transfer deals have fallen to the lowest January level since records began in 2007.

Research carried out by Moneyfacts.co.uk has found that not only are interest-free balance transfer deals are at their lowest levels, but the length of these interest-free deals has fallen to a five-year low – offering the shortest average deal length since January 2015.

Indeed, Moneyfacts.co.uk has found that there are currently 76 credit cards deals that offer introductory 0% terms for balance transfers, down from 84 a year ago, 99 two years ago and 122 in 2017. In addition to this, back in January 2017 the top interest-free balance deal offered 43 months of 0% interest, while today the longest interest-free period is just 29 months.

Credit card market analysis 

  Jan 2017 Jan 2018 Jan 2019 Jan 2020
Average interest-free balance transfer term (days) 659 632 564 536
Longest interest-free balance transfer term card MBNA Limited - 43 months - 3.29% balance transfer fee Barclaycard - 38 months - 1.40% balance transfer fee MBNA Limited - 33 months - 1.99% balance transfer fee MBNA Limited - 29 months - 2.75% balance transfer fee
Number of interest-fee balance transfer deals 122 99 84 76
Average introductory balance transfer fee 2.31% 2.04% 2.32% 2.27%

Longest interest-free deals exclude cards with an admin fee. 

Commenting on the research, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The start of a new year could spell a rise in demand for interest-free balance transfer credit card offers, but the number of offers has hit a record low this month. There are now just 76 deals on the market that offer a 0% introductory term for balance transfers, a stark contrast from January 2017 when there were 122.

“Lengthy offers have declined as well and today the top card has a 0% balance transfer term of 29 months (MBNA), a staggering drop of 14 months compared to the top deal in 2017 of 43 months (MBNA). In fact, based on all these interest-free balance transfer cards, 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.

“Those consumers who used a credit card to pay for some of the festive season may be looking to acquire a 0% balance transfer card, but if they do then they would be wise to make fixed repayments. For instance, someone with a £3,000 debt that paid £150 back as a minimum per month would clear the debt in 20 months, but there are cards that can default to a repayment of just 1% plus monthly interest – so their debt would hang overhead for much longer on this basis.

“Clearly, the lengthy interest-free balance transfer offers have undergone a transformation as providers changed their ranges in response to the Financial Conduct Authority’s persistent debt ruling. Consumers struggling with debt would be wise to seek advice, particularly as their card could be suspended if they have been paying more in interest and charges than the original debt.”

Recent industry research has identified consumers expect to spend an average of £1,522 on Christmas this year and 44% expect to use a credit card for their festive spending.

Moneyfacts.co.uk has reviewed the best reward credit cards offered by leading retailer brands to identify what vouchers and rewards consumers can earn on their credit card spending. We prioritised the value of the reward available when spent with the same retailer as the credit card and the longest interest-free promotional offers available.

Consumers are expected to spend an average £1,522 each during the festive season, with the most money being spent on Christmas getaways, gifts and hosting parties, research from American Express reveals.

On average, consumers are predicted to spend £458 on Christmas getaways, which is followed by £312 on gifts and £124 on hosting parties, the research found. In addition to this, consumers are also planning to spend money on travel (£119), gatherings (£112), new clothes (£112), festive experiences (£108), Christmas Day food shopping (£102) and Christmas decorations (£75).

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