Credit card providers slash 0% balance transfer deals

Credit card customers are being hit with record-high APRs and shorter 0% balance transfer deals.

Tesco Bank recently reduced its market-leading 0% balance transfer offer from 29 months down to 27 months. Last month, Virgin Money cut its 28-month 0% balance transfer deal to 26 months.

It means the longest balance transfer card is now Barclaycard (28 months), according to Moneyfacts. A year ago, the best deal was 30 months.

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"Interest-free offers have unfortunately worsened in terms of the time given to borrowers to pay back their debt before interest applies," comments Rachel Springall, finance expert at Moneyfactscompare.co.uk.

The average balance transfer deal for someone trying to consolidate their credit card debt is 17 months, down from 20 months two years ago.

Meanwhile, the average purchase APR (annual percentage rate) on a credit card is at a record high of 35.6%.

This is despite interest rates being lowered at the start of the month - the first cut since 2020. The Bank of England base rate is now at 5%.

Oliver Crawford from the consumer group Fairer Finance notes: “We always encourage borrowers to repay their transferred debt entirely during the 0% period, otherwise they'll face a much higher APR.”  

Fairer Finance is calling on credit card providers to improve their communications so customers understand exactly how balance transfer cards work, and don’t get caught out by small print. For example, by making it as clear as possible that customers can potentially lose their 0% period entirely if they miss a repayment.

According to the consumer group, providers should also do more to explain that 0% balance transfer cards generally aren't suitable for making purchases or cash withdrawals, because that spending will usually accrue interest until the entire balance transfer is cleared.

Should I use a 0% balance transfer credit card?

An interest-free balance transfer card can be a useful way to slash the cost of existing credit card debt. It can save you hundreds of pounds in interest payments - but you must try and repay all the money you owe before the 0% period finishes, or you’ll get stung by a high interest rate.

According to Springall, parents who have spent too much in the school holidays may be looking to shift credit card debt onto a 0% deal, while others may have maxed out their credit cards on home improvements during the summer.

Note that the maximum 0% offer is not available to everyone; so some borrowers will get the highest amount (say 25 months), while others will get less.

You should also watch out for the balance transfer fee, and any other charges and small print. 

And always avoid spending on it, or withdrawing cash. (If you’re looking for an interest-free credit card for spending, check out our round-up of the best 0% credit card deals for purchases.)

Springall comments: "Consumers looking to consolidate their credit card debts would typically turn to a 0% balance transfer offer, particularly when their existing debt is incurring interest at a high rate. 

"Those who do use these deals will usually have to pay a balance transfer fee, so it’s wise to keep this in mind if debts are going to be moved around often over the short term. Some of the longest interest-free balance transfer offers carry higher transfer fees, but there are still some fee-free offers for borrowers to consider instead."

Where can I find the best rates right now?

The longest balance transfer deal is currently the Barclaycard Platinum 28-Month Balance Transfer Visa. At the end of the 28 months, the interest rate jumps to 24.9% APR. 

The deal also comes with a chunky 3.45% balance transfer fee, which is higher than most; balance transfer fees are often less than 3%.

Here are the longest balance transfer cards on the market right now, according to Moneyfacts. 

It’s important to know that you may not get the full duration of the 0% offer, as this will depend on your credit rating. To see what you could get, use an eligibility checker, like the one on our sister site GoCompare to see what balance transfer card you can get. 

If you’re looking for a no-fee balance transfer credit card, check our 0% balance transfer cards best buy guide to see the top rates on the market.