Ultra-long zero-interest balance transfer deals disappearing, research finds


Competition to offer credit card customers ultra-long 0% balance transfer deals is starting to wane, research suggests.

Moneyfacts.co.uk found the very longest zero-interest balance transfer deals are disappearing.

It said that in April, borrowers could find interest-free deals lasting as long as 43 months, with several providers also offering periods of 42 months or 41 months. But now, the longest interest-free deal without a usage fee is for 40 months, it said.

Six months ago, there were 126 introductory balance transfer deals at 0% on the market, but by August the choice has fallen to 119 deals, Moneyfacts found.

The average length of a 0% introductory balance transfer deal six months ago was 669 days, but now that has fallen to 645 days.

However, the average introductory balance transfer fee has fallen, from 2.29% six months ago to 2.16% in August.

Bank of England reports showing strong annual growth in consumer credit have prompted concerns that some households could be at risk of over-stretching their borrowing as living costs rise and wages stagnate.

A recent Bank of England survey of banks and building societies suggested some households could find it harder to take on more credit as providers were planning to impose stricter borrowing criteria.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said interest-free balance transfer cards can be a helpful choice for consumers looking to consolidate and spread the cost of their debts - but their main goal should be repaying the balance as soon as possible and not putting it off if they are granted a lengthy 0% deal.

She said: "The longest-term 0% offer may well get the spotlight, but borrowers must also consider any up-front fees that are charged to move the debt across...

"Balance transfer fees should be considered and compared when moving debt. A borrower with a £4,000 debt that's moved for a 3% fee would have to fork out £120.

"Consumers could instead avoid fees altogether, as there are interest-free and fee-free cards around, but they will need to look away from the longest deals to find these."

Ms Springall said borrowers should also try to overpay their balance wherever possible, to shrink their debt down faster.