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Card providers compete for balance transfer business

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
15/03/2022

Card providers compete for balance transfer business

Card providers compete for balance transfer business

Moneyfacts UK Unsecured Lending Trends Treasury Report, which studies the UK personal finance market, (Credit Cards, Personal Loans and Overdrafts) reveals the most notable movement during Q1 2022 has been on balance transfer credit cards, with the average introductory interest-free term surpassing 600 days for the first time since May 2018.

 

Moneyfacts UK Unsecured Lending Trends Treasury Report, which studies the UK personal finance market, (Credit Cards, Personal Loans and Overdrafts) reveals the most notable movement during Q1 2022 has been on balance transfer credit cards, with the average introductory interest-free term surpassing 600 days for the first time since May 2018.

 

  • The average interest-free balance transfer term on credit cards rose to 602 days, from 577 days in December. Terms are up year-on-year from 530 days and are currently the longest seen since May 2018, when the average was 622. In May 2018 there were 101 deals, far more than the latest count of 69, but the latest figure is the highest since April 2020 at 70 deals.
  • Balance transfer fees have fallen to 1.95% on average, down from 2.23% a year ago, now the lowest recorded since October 2006 when it was 1.82%.
  • Interest-free purchase card terms improved slightly over the past quarter, now offering 307 days at 0% on average, up from 303 days in December. Terms have improved year-on-year from 284 days, but the longest recorded was 381 in May 2017. There are 62 options available compared to 56 a year ago and 68 two years ago, the latest count is the highest since January 2022 when there were 63 deals.
  • Between the start of December and the start of March 2022 (Q1 2022), the average purchase APR (which includes card fees) rose to 26.3% APR. According to our records, which go back to June 2006, the highest rate recorded was 26.4% in October 2021. New cards charging higher than average rates last month contributed to this rise.
  • The average interest-free balance transfer term on credit cards rose to 602 days, from 577 days in December. Terms are up year-on-year from 530 days and are currently the longest seen since May 2018, when the average was 622. In May 2018 there were 101 deals, far more than the latest count of 69, but the latest figure is the highest since April 2020 at 70 deals.
  • Balance transfer fees have fallen to 1.95% on average, down from 2.23% a year ago, now the lowest recorded since October 2006 when it was 1.82%.
  • Interest-free purchase card terms improved slightly over the past quarter, now offering 307 days at 0% on average, up from 303 days in December. Terms have improved year-on-year from 284 days, but the longest recorded was 381 in May 2017. There are 62 options available compared to 56 a year ago and 68 two years ago, the latest count is the highest since January 2022 when there were 63 deals.
  • Between the start of December and the start of March 2022 (Q1 2022), the average purchase APR (which includes card fees) rose to 26.3% APR. According to our records, which go back to June 2006, the highest rate recorded was 26.4% in October 2021. New cards charging higher than average rates last month contributed to this rise.

Credit card market analysis

 

Mar-20

Mar-21

Dec-21

Feb-22

Mar-22

Average purchase APR (includes fee)

25.0%

25.0%

26.2%

26.2%

26.3%

Average purchase rate per annum

22.754%

22.426%

23.621%

23.696%

23.733%

Average interest-free purchase term (days)

314

284

303

310

307

Number of introductory interest-free purchase deals

68

56

62

61

62

Average interest-free balance transfer term (days)

534

530

577

598

602

Number of introductory interest-free balance transfer deals

73

59

68

68

69

Average balance transfer fee

2.30%

2.23%

1.96%

1.95%

1.95%

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

Credit card market analysis

 

Mar-20

Mar-21

Dec-21

Feb-22

Mar-22

Average purchase APR (includes fee)

25.0%

25.0%

26.2%

26.2%

26.3%

Average purchase rate per annum

22.754%

22.426%

23.621%

23.696%

23.733%

Average interest-free purchase term (days)

314

284

303

310

307

Number of introductory interest-free purchase deals

68

56

62

61

62

Average interest-free balance transfer term (days)

534

530

577

598

602

Number of introductory interest-free balance transfer deals

73

59

68

68

69

Average balance transfer fee

2.30%

2.23%

1.96%

1.95%

1.95%

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

Rachel Springall, Finance Expert at Moneyfacts, said:

“The credit card market has had to adapt to economic uncertainties and, as we mark two years on since the first UK lockdown, the latest movements on balance transfer cards is welcome news for consumers looking to move their debts interest-free. The average term on an introductory 0% balance transfer card is at its highest in almost four years, surpassing 600 days for the first time since May 2018. The growth in choice is also encouraging since we saw the number of deals fall to a record low during July-August 2020, just a few months on from the initiation of the first UK lockdown. Those looking to move their debts will also see the average introductory balance transfer fee has fallen to 1.95%, which is 0.35% less than in March 2020.

“One provider to make a notable change to its balance transfer offer last month was Sainsbury’s Bank, which increased its balance transfer card by one month to 24. Santander also increased its own interest-free offer to 21 months, up from 18 months on its fee-free deal. One of the most prominent offers to worsen was the market-leading 35-month deal from Virgin Money, which dropped down to 32 months. However, competitive deals remain in play despite some shifts to the market-leaders, with MBNA offering the longest deal today at 33 months, four months more than the longest deal a year ago from Sainsbury’s Bank at 29 months.

“The average UK credit card debt per household in December 2021, according to The Money Charity was £2,112, a balance that could be cleared in one year if £180 was paid off each month without interest being applied. However, if consumers stick to the minimum repayment, even a debt of this size could hang overhead for many years. As the cost of living rises, consumers may be tempted to reduce their credit card repayments and, while this is a nice flexible feature to have in times of need, it’s imperative borrowers are mindful of their debts, any interest-free deal that may be coming to an end, and switch if they want to avoid incurring interest.

“As has been the case for many years, the best 0% balance transfer card for someone may not be the one with longest interest-free offer, as there are credit cards out there with low balance transfer fees or even charging no fee. Not every borrower will be eligible for a headline grabbing deal, but it’s always wise for consumers to check their credit score before they apply, such as with Experian. If customers are struggling to keep up with their repayments amid the rising cost of living, they would do well to seek help from a debt advice charity.”

Rachel Springall, Finance Expert at Moneyfacts, said:

“The credit card market has had to adapt to economic uncertainties and, as we mark two years on since the first UK lockdown, the latest movements on balance transfer cards is welcome news for consumers looking to move their debts interest-free. The average term on an introductory 0% balance transfer card is at its highest in almost four years, surpassing 600 days for the first time since May 2018. The growth in choice is also encouraging since we saw the number of deals fall to a record low during July-August 2020, just a few months on from the initiation of the first UK lockdown. Those looking to move their debts will also see the average introductory balance transfer fee has fallen to 1.95%, which is 0.35% less than in March 2020.

“One provider to make a notable change to its balance transfer offer last month was Sainsbury’s Bank, which increased its balance transfer card by one month to 24. Santander also increased its own interest-free offer to 21 months, up from 18 months on its fee-free deal. One of the most prominent offers to worsen was the market-leading 35-month deal from Virgin Money, which dropped down to 32 months. However, competitive deals remain in play despite some shifts to the market-leaders, with MBNA offering the longest deal today at 33 months, four months more than the longest deal a year ago from Sainsbury’s Bank at 29 months.

“The average UK credit card debt per household in December 2021, according to The Money Charity was £2,112, a balance that could be cleared in one year if £180 was paid off each month without interest being applied. However, if consumers stick to the minimum repayment, even a debt of this size could hang overhead for many years. As the cost of living rises, consumers may be tempted to reduce their credit card repayments and, while this is a nice flexible feature to have in times of need, it’s imperative borrowers are mindful of their debts, any interest-free deal that may be coming to an end, and switch if they want to avoid incurring interest.

“As has been the case for many years, the best 0% balance transfer card for someone may not be the one with longest interest-free offer, as there are credit cards out there with low balance transfer fees or even charging no fee. Not every borrower will be eligible for a headline grabbing deal, but it’s always wise for consumers to check their credit score before they apply, such as with Experian. If customers are struggling to keep up with their repayments amid the rising cost of living, they would do well to seek help from a debt advice charity.”

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.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert