Interest-free periods offered on credit cards expected to shorten over summer

Lenders expect the length of interest-free periods being offered on credit cards to become shorter in the coming months.

This means new borrowers face having less time to clear their balance before interest charges start to kick in, or else they switch to another interest-free deal.

The Bank of England’s Credit Conditions Survey said the length of interest-free periods for balance transfers and new purchases on new credit card lending both decreased significantly in the three months leading up to the end of May.

In the following three months, the length of interest-free periods for new purchases and for balance transfers were both expected to fall, the quarterly survey of banks and building societies found.

Meanwhile, lenders anticipate that mortgage availability will increase over the three months to the end of August.

But the number of non-mortgage loans being approved is expected to decrease over the same period.

Lenders predict demand for corporate lending over the summer will remain unchanged for small and medium-sized businesses, and decrease slightly for larger firms.

The overall availability of credit to the corporate sector is expected to decrease slightly in the coming months.