The balance transfer credit card market is booming with the average number of interest-free months at their highest since November 2018 and fees at their lowest for 15 years.
Credit cards with balance transfer allow people to transfer existing credit card debt to a card that charges 0% interest for a number of months. There is normally a “balance transfer fee”, expressed as a percentage of the debt transferred, to do this consolidate credit card debt
According to Moneyfacts UK Treasury report on unsecured lending trends, the average interest-free balance transfer time on credit cards fell to 577 days in December, from 548 days in September. At the same time last year, the average duration of 0% stood at 520 days.
The consolidate credit card debt current term is the longest since November 2018, when it was 580. There are now 68 balance transfer agreements available, the highest number in 2021.
Balance transfer fees fell to 1.96% on average, from 2.22% a year ago. The current figure is the lowest recorded since October 2006, when average fees were 1.82%.
Buy an APRS credit card on the rise
According to Moneyfacts, between early September and early December 2021 (Q4 2021), the average purchase APR (which includes card fees) rose to 26.2% APR.
According to the data analyst’s records, which date back to June 2006, the highest rate on record was 26.4% in October 2021. A combination of changes contributed to the latest hike, including rate hikes for some. maps and the launch of new maps.
The terms of interest-free acquisition cards have deteriorated in the last quarter, now offering 303 days at 0% on average, down from 316 days in September. At the same time last year, the average 0% purchase time was 278 days. The longest recorded was 381 in May 2017.
Rachel Springall, Financial Expert at Moneyfacts, said: “As the holiday season approaches, it looks like credit card providers have revamped their interest-free balance transfer offers, which could very well be. the perfect time for borrowers looking to consolidate their debts. and have more time to pay off their balance without incurring interest. The terms of 0% introductory balance transfer have lengthened, the fees associated with the transfer have decreased, and there is more choice.
“One provider to make a notable change was Tesco Bank, which increased its balance transfer card from one month to 27 months and lowered its transfer fee to 1.19%, from 1.49%. Santander also launched a 31-month introductory 0% balance transfer card in September, currently the longest term on the market and the longest since 2019.
“Spenders will have seen a slight fluctuation with interest-free bids this quarter, despite a slight decrease in average duration to 0% since September, interest-free durations are still up from a year ago and there are a few other offers to choose from.
“Apart from a 0% offer, the average purchase APR rose to 26.2%. Some card providers increased their purchase rates during the quarter, including Tesco Bank which saw an increase from 20.9% to 21.9% on its low-cost Clubcard Mastercard and American Express balance transfer card, which increased rates on its entire card line, which included its Platinum Cashback. from 27.3% APR to 29.8%.