The latest monthly statistics released by UK Finance this morning show there is still huge demand for 0% credit card balance transfers with 622,000 transactions totalling £1.3 billion in July.
Consumers may still be chasing these deals but lenders are already starting to reduce the terms following criticism from the Bank of England regarding a potential credit bubble.
At the turn of the year MBNA and Halifax offered a record term of 43 months on their 0% cards with many other providers offering 40 month plus deals.
Today there are only two 40 month cards left on the market, so if you’re thinking of switching your card balance to a zero percent card to cut your interest costs you need to act sooner rather than later as the terms will only continue to shrink in the coming months.
As I’ve mentioned before don’t focus purely on the 0% term, look at the balance transfer fee too – for example Tesco Bank is currently offering 40 months interest free with a balance transfer fee of 2.69% yet if you opt for one month shorter with MBNA (39 months) the fee is just 1.48% – so on a £5,000 transfer the Tesco deal would cost you £134.50 compared with MBNA at just £74.
Banks are not only shortening the terms of these interest free card offers but are tightening their underwriting criteria so unless you’ve got a tip top credit rating you may find you’re offered a less attractive deal or even have your application declined.
- Fixed rate savings – best buy rates edging upwards - September 17, 2020
- 0% Credit Card Balance Transfer terms on the slide since lockdown - July 13, 2020
- Mainstream credit card rates unchanged in 2020 – for now - June 16, 2020