Beat record credit card interest rates

Interest rates on credit cards have reached a record high. Here's how to beat them

Updated: 
Beat record credit card interest rates

The average cost of credit card debt has increased to a record high of 20.6% APR, according to new research from Moneyfacts.

That's up from 19.9% last year.

One factor behind this rise is the cap on interchange fees which will be introduced in October. When you're making a transaction, your bank sends your payment to the retailer's (acquiring) bank and deducts a small fee. This is the interchange fee. It mostly covers operating services such as fraud prevention and customer call centres.

However, the European Commission is introducing a cap on these fees, which is denting the profitability of credit cards. It's already led to the withdrawal of some rewards credit cards, with Capital One and RBS scrapping their reward schemes, and is now helping to push up the interest rates charged too.

Beating the fees

Of course, if you pay your bill off in full every month, you won't have to pay any interest, no matter what rate your card carries. But if you need to pay your balance off in stages, you can still beat the fee rise by making use of a 0% credit card.

The top 0% balance transfer credit cards

If you have a big chunk of debt already on a credit card and need to pay it off in chunks, then check out the longest 0% balance transfer deals on offer today:
Credit card0% period on balance transfersBalance transfer feeCost of transferring £2,000 balanceRepresentative APR
Barclaycard 36 Month Balance Transfer Visa36 months2.49%£49.8018.9%
Virgin 36 Month Balance Transfer Credit Card MasterCard36 months2.50%£5018.9%
Halifax 36 Month Balance Transfer Credit Card MasterCard36 months2.90%£5818.9%
Bank of Scotland Platinum 36 Month Balance Transfer MasterCard36 months3.00%£6018.9%
Barclaycard Platinum 35 Month Balance Transfer Visa35 months2.39%£47.8018.9%
MBNA Platinum 35 Month Balance Transfer Visa Card35 months2.69%£53.8018.9%
Tesco Bank Clubcard Credit Card for Balance Transfer MasterCard35 months2.70%£5418.9%
Lloyds Bank Platinum 35 Month Balance Transfer Credit Card35 months3.00%£6018.9%


See more top balance transfer credit cards

The top low-fee 0% balance transfer credit cards

If you're happier with a shorter interest-free period, you could get benefit from a lower (or free) transfer fee:
0% period on balance transfersBalance transfer feeFee paid on £2,000 transferRepresentative APR after 0% period ends
Santander 123 Credit Card*23 monthsNone£016.5%
Tesco Bank Clubcard 18 Month No Fee Credit Card18 monthsNone£018.9%
Halifax All in One Credit Card19 months1%£2018.9%
Barclaycard Platinum24 months1.15%£2318.9%
Virgin Money Balance Transfer Credit Card26 months1.25%£2518.9%
Barclaycard Platinum Balance Transfer Credit Card28 Months1.35%£2718.9%

*Annual fee of £24

The best 0% purchase credit cards

If you have some big purchases coming up in the near future, like a new boiler or a fridge, an interest-free purchase credit card might be the best bet:
Credit card0% periodRepresentative APR
Santander 123 Credit Card MasterCard*23 months16.5%
Tesco Bank Clubcard Credit Card for Purchases MasterCard21 months18.9%
Clydesdale Bank Gold MasterCard20 months18.9%
Yorkshire Bank Gold MasterCard20 months18.9%
Halifax Purchase Credit Card MasterCard20 months18.9%
Sainsbury's Nectar Purchase Credit Card19 months18.9%
Lloyds Bank Online 19 Month Platinum Purchase MasterCard19 months18.9%
Bank of Scotland 19 month Platinum Purchase MasterCard19 months18.9%
M&S MasterCard19 months18.9%

*Annual fee of £24

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