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Balance transfer credit card market flourishes

Image of a Moneyfacts Unsecured Lending Treasury Report Image of a Moneyfacts Unsecured Lending Treasury Report Image of a Moneyfacts Unsecured Lending Treasury Report
Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
13/12/2021

Balance transfer credit card market flourishes

Balance transfer credit card market flourishes

Moneyfacts UK Unsecured Lending Trends Treasury Report, which studies the UK personal finance market (Credit Cards, Personal Loans and Overdrafts) reveals during Q4 2021 the average 0% term on a balance transfer card rose to its highest level seen since November 2018 and the average balance transfer fee fell to the lowest level seen since October 2006.

 

Moneyfacts UK Unsecured Lending Trends Treasury Report, which studies the UK personal finance market (Credit Cards, Personal Loans and Overdrafts) reveals during Q4 2021 the average 0% term on a balance transfer card rose to its highest level seen since November 2018 and the average balance transfer fee fell to the lowest level seen since October 2006.

 

  • The average interest-free balance transfer term on credit cards rose to 577 days, from 548 days in September. Terms are up year-on-year from 520 days. The current term is the longest seen since November 2018 when it was 580. There are now 68 deals, the most there have been throughout 2021.
  • Balance transfer fees have fallen to 1.96% on average, down from 2.22% a year ago, now the lowest recorded since October 2006 when it was 1.82%.
  • Between the start of September and the start of December 2021 (Q4 2021), the average purchase APR (which includes card fees) rose to 26.2% APR. According to our records, which go back to June 2006, the highest rate recorded was 26.4% in October 2021. A combination of changes contributed to this rise, including rate increases to some cards and new card launches.
  • Interest-free purchase card terms worsened over the past quarter, now offering 303 days at 0% on average, down from 316 days in September. Terms have improved year-on-year from 278 days, but the longest recorded was 381 in May 2017.
  • The average interest-free balance transfer term on credit cards rose to 577 days, from 548 days in September. Terms are up year-on-year from 520 days. The current term is the longest seen since November 2018 when it was 580. There are now 68 deals, the most there have been throughout 2021.
  • Balance transfer fees have fallen to 1.96% on average, down from 2.22% a year ago, now the lowest recorded since October 2006 when it was 1.82%.
  • Between the start of September and the start of December 2021 (Q4 2021), the average purchase APR (which includes card fees) rose to 26.2% APR. According to our records, which go back to June 2006, the highest rate recorded was 26.4% in October 2021. A combination of changes contributed to this rise, including rate increases to some cards and new card launches.
  • Interest-free purchase card terms worsened over the past quarter, now offering 303 days at 0% on average, down from 316 days in September. Terms have improved year-on-year from 278 days, but the longest recorded was 381 in May 2017.
Unsecured Lending Treasury Report Q3 cover Unsecured Lending Treasury Report Q3 cover Unsecured Lending Treasury Report Q3 cover

Credit card market analysis

 

Dec-19

Dec-20

Sep-21

Nov-21

Dec-21

Average purchase APR (includes fee)

25.0%

25.1%

26.0%

26.3%

26.2%

Average purchase rate per annum

22.820%

22.695%

23.515%

23.676%

23.621%

Average interest-free purchase term (days)

307

278

316

300

303

Number of introductory interest-free purchase deals

68

56

59

62

62

Average interest-free balance transfer term (days)

536

520

548

567

577

Number of introductory interest-free balance transfer deals

75

60

61

67

68

Average balance transfer fee

2.34%

2.22%

2.10%

1.97%

1.96%

Data based on the start of the month.
Source: Moneyfacts Treasury Reports

Credit card market analysis

 

Dec-19

Dec-20

Sep-21

Nov-21

Dec-21

Average purchase APR (includes fee)

25.0%

25.1%

26.0%

26.3%

26.2%

Average purchase rate per annum

22.820%

22.695%

23.515%

23.676%

23.621%

Average interest-free purchase term (days)

307

278

316

300

303

Number of introductory interest-free purchase deals

68

56

59

62

62

Average interest-free balance transfer term (days)

536

520

548

567

577

Number of introductory interest-free balance transfer deals

75

60

61

67

68

Average balance transfer fee

2.34%

2.22%

2.10%

1.97%

1.96%

Data based on the start of the month.
Source: Moneyfacts Treasury Reports

Rachel Springall, Finance Expert at Moneyfacts, said:

“In the run-up to the festive season it seems credit card providers have made overhauls to their interest-free balance transfer offers, which could well be perfectly timed for borrowers looking to consolidate their debts and have more time to pay off their balance without incurring interest. 0% introductory balance transfer terms have lengthened, associated fees to transfer have fallen and there is more choice. One provider to make a notable change was Tesco Bank, which increased its balance transfer card by one month to 27 months and dropped its transfer fee to 1.19%, down from 1.49%. Santander also launched a 31-month 0% introductory balance transfer card in September, currently the longest term on the market and the longest term since 2019.

“Spenders will have found a slight fluctuation with interest-free purchase offers this quarter, despite a slight fall in the average 0% term since September, interest-free terms are still up compared to a year ago and there are a few more deals to choose from. Outside of a 0% offer though, the average purchase APR has risen to 26.2%. Some card providers increased their purchase rates during the quarter, including Tesco Bank which saw an increase from 20.9% to 21.9% on its Low Fee Balance Transfer Clubcard Mastercard and American Express, which increased rates across its entire card range, which included its Platinum Cashback Credit Card from 27.3% APR to 29.8%.

“As we head towards 2022, consumers would be wise to take time to compare offers now, especially if they are looking to consolidate debts. The best balance transfer card may not be the one with the longest 0% term, as borrowers could be better off seeking a shorter term with a lower balance transfer fee or even a fee-free option. Not only this, but borrowers are not guaranteed to get the advertised deal. Once they have a new card, being diligent and sticking to a repayment plan is as essential as it is to keep eyes on their credit report before applying for a credit card, or to seek debt advice if they are finding it hard to keep up with repayments.”

Rachel Springall, Finance Expert at Moneyfacts, said:

“In the run-up to the festive season it seems credit card providers have made overhauls to their interest-free balance transfer offers, which could well be perfectly timed for borrowers looking to consolidate their debts and have more time to pay off their balance without incurring interest. 0% introductory balance transfer terms have lengthened, associated fees to transfer have fallen and there is more choice. One provider to make a notable change was Tesco Bank, which increased its balance transfer card by one month to 27 months and dropped its transfer fee to 1.19%, down from 1.49%. Santander also launched a 31-month 0% introductory balance transfer card in September, currently the longest term on the market and the longest term since 2019.

“Spenders will have found a slight fluctuation with interest-free purchase offers this quarter, despite a slight fall in the average 0% term since September, interest-free terms are still up compared to a year ago and there are a few more deals to choose from. Outside of a 0% offer though, the average purchase APR has risen to 26.2%. Some card providers increased their purchase rates during the quarter, including Tesco Bank which saw an increase from 20.9% to 21.9% on its Low Fee Balance Transfer Clubcard Mastercard and American Express, which increased rates across its entire card range, which included its Platinum Cashback Credit Card from 27.3% APR to 29.8%.

“As we head towards 2022, consumers would be wise to take time to compare offers now, especially if they are looking to consolidate debts. The best balance transfer card may not be the one with the longest 0% term, as borrowers could be better off seeking a shorter term with a lower balance transfer fee or even a fee-free option. Not only this, but borrowers are not guaranteed to get the advertised deal. Once they have a new card, being diligent and sticking to a repayment plan is as essential as it is to keep eyes on their credit report before applying for a credit card, or to seek debt advice if they are finding it hard to keep up with repayments.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert