Interest-free periods on credit cards are getting longer, analysis finds

The average introductory interest-free period being offered on balance transfer credit cards has surpassed 600 days for the first time in nearly four years.

The typical interest-free balance transfer term on credit cards is now 602 days, according to Moneyfacts.co.uk, which said it is the first time the period has topped 600 days since May 2018.

The findings could be good news for those looking to shift debts around in order to pay less for servicing the debt. However, people will need to bear in mind any fees for transferring the balance.

Moneyfacts said the average balance transfer fee is 1.95%, which is lower than an average of 2.30% recorded in March 2020.

The choice of deals is lower than it was back in May 2018 though.

In May 2018 there were 101 deals, compared with the latest count of 69.

The choice of products is the widest since the early days of the coronavirus pandemic in April 2020, when there were 70 deals.

Interest-free purchase card terms have also improved slightly in recent months, now offering 307 days at 0% on average, up from 303 days in December, Moneyfacts said.

Rachel Springall, a finance expert at Moneyfacts, said: “One provider to make a notable change to its balance transfer offer last month was Sainsbury’s Bank, which increased its balance transfer card by one month to 24.

“Santander also increased its own interest-free offer to 21 months, up from 18 months on its fee-free deal.

“One of the most prominent offers to worsen was the market-leading 35-month deal from Virgin Money, which dropped down to 32 months.

“However, competitive deals remain in play despite some shifts to the market-leaders, with MBNA offering the longest deal today at 33 months, four months more than the longest deal a year ago from Sainsbury’s Bank at 29 months.”

She continued: “As the cost of living rises, consumers may be tempted to reduce their credit card repayments and, while this is a nice flexible feature to have in times of need, it’s imperative borrowers are mindful of their debts, any interest-free deal that may be coming to an end, and switch if they want to avoid incurring interest.

“As has been the case for many years, the best 0% balance transfer card for someone may not be the one with longest interest-free offer, as there are credit cards out there with low balance transfer fees or even charging no fee.

“Not every borrower will be eligible for a headline grabbing deal, but it’s always wise for consumers to check their credit score before they apply, such as with Experian.

“If customers are struggling to keep up with their repayments amid the rising cost of living, they would do well to seek help from a debt advice charity.”