There is an awful lot of outstanding debt on credit cards in the U.K. According to the most recent figures from The Money Charity, the nation owes around £70 billion on credit cards at the moment, which works out at about £2,574 per household.
That’s not exactly small change; if you only paid off the minimum each month, it would take you a massive 26 years and three months to clear that debt entirely.
However, one simple way to make clearing that debt easier is to move it onto a card which offers an interest-free period on balance transfers. The idea is that you pay a small transfer fee – generally around 3% of the balance you are transferring – and then get to pay the debt off in smaller chunks over a couple of years, without paying interest on that balance.
It’s a solid tactic, as you know that every penny goes directly towards reducing that debt, rather than a slice disappearing on interest charges.
What’s more, the start of a new year is generally a great time to be in the market for one of these cards. Card providers are well aware that many of us overdo it a bit at Christmas and so look to tempt us with beefy 0% periods in January, a time when we are most likely to be looking to get our finances into better shape.
So it’s unfortunate that 2018 has got off to an inauspicious start on that front.
While January is generally a time of hot competition among card providers, this year that level of competition is as damp and depressing as the weather. According to financial information site Moneyfacts, so far in January just two card providers – AA and Barclaycard – have launched new cards or improved their existing balance transfer card range.
Compare that to last year, when the likes of the AA, Bank of Scotland, Halifax, Lloyds Bank, M&S Bank, Post Office Money and Virgin Money were all launching new deals.
It isn’t just the number of lenders competing that is a concern though; the deals on offer have dropped in quality too.
A year ago, the longest 0% period on offer from a balance transfer card was a massive 43 months from Halifax. That’s more than three and a half years in which to clear the outstanding balance.
Today, the longest interest-free period on offer is 38 months. Still a healthy 0% period undoubtedly, but significantly shorter than just 12 months ago.
Rachel Springall, finance expert at moneyfacts.co.uk, said, “It seems that the usual boom in interest-free credit card offers has gone a bit stale this year, with very few tantalizing offers propelled onto the market to choose from. As it stands today, borrowers looking to take out a balance transfer credit card will find that they have a shorter term to repay any debts.