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Credit card interest rates rise and 0% deals stall

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
24/06/2024

Credit card interest rates rise and 0% deals stall

Credit card interest rates rise and 0% deals stall

Moneyfacts Unsecured Lending Trends Treasury Report data, which studies the UK personal finance market (Credit Cards, Personal Loans and Overdrafts), reveals the cost to borrow on a credit card rose to a new record high and the availability of 0% purchase offers stalled during Q2 2024.

 

Moneyfacts Unsecured Lending Trends Treasury Report data, which studies the UK personal finance market (Credit Cards, Personal Loans and Overdrafts), reveals the cost to borrow on a credit card rose to a new record high and the availability of 0% purchase offers stalled during Q2 2024.

 

  • Between the start of March 2024 and the start of June 2024 (Q2 2024), the average purchase APR (which includes card fees) rose to 35.3% APR, the highest on our electronic records which started in June 2006. A combination of card withdrawals and interest rate rises all contributed to this change. The average purchase PA rate rose to 25.860% during Q2 2024, which is higher than a year ago.
  • The number of interest-free purchase offers remained at 58 during Q2 2024. There are fewer options for borrowers to choose from than a year ago, down from 67 offers to 58. The average interest-free purchase term on credit cards rose to 264 days, up from 255 days in March 2024, with terms up year-on-year.
  • The number of interest-free balance transfer offers fell from 61 to 60 during Q2 2024. There are fewer options for borrowers to choose from than a year ago, down from 73 offers to 60. The average interest-free balance transfer term on credit cards rose to 522 days, from 517 days in March 2024, with terms down year-on-year.
  • Balance transfer fees have risen to 2.42% on average, up from 2.40% in March 2024 and up from 2.26% a year ago.
  • The average unsecured personal loan rate for £5,000 over three years is up compared to the beginning of March 2024. The average rate on the £5,000 loan tier stands at its highest point in over 10 years (March 2013 – 11.7%). Average unsecured personal loan rates for £3,000 over three years, £7,500 over five years and £10,000 over five years have fallen during Q2 2024.

 

  • Between the start of March 2024 and the start of June 2024 (Q2 2024), the average purchase APR (which includes card fees) rose to 35.3% APR, the highest on our electronic records which started in June 2006. A combination of card withdrawals and interest rate rises all contributed to this change. The average purchase PA rate rose to 25.860% during Q2 2024, which is higher than a year ago.
  • The number of interest-free purchase offers remained at 58 during Q2 2024. There are fewer options for borrowers to choose from than a year ago, down from 67 offers to 58. The average interest-free purchase term on credit cards rose to 264 days, up from 255 days in March 2024, with terms up year-on-year.
  • The number of interest-free balance transfer offers fell from 61 to 60 during Q2 2024. There are fewer options for borrowers to choose from than a year ago, down from 73 offers to 60. The average interest-free balance transfer term on credit cards rose to 522 days, from 517 days in March 2024, with terms down year-on-year.
  • Balance transfer fees have risen to 2.42% on average, up from 2.40% in March 2024 and up from 2.26% a year ago.
  • The average unsecured personal loan rate for £5,000 over three years is up compared to the beginning of March 2024. The average rate on the £5,000 loan tier stands at its highest point in over 10 years (March 2013 – 11.7%). Average unsecured personal loan rates for £3,000 over three years, £7,500 over five years and £10,000 over five years have fallen during Q2 2024.

 

Credit card market analysis

 

Jun-22

Jun-23

Mar-24

May-24

Jun-24

Average purchase APR (includes fee)

26.7%

31.2%

34.7%

35.1%

35.3%

Average purchase rate per annum

23.834%

25.359%

25.659%

25.767%

25.860%

Average interest-free purchase term (days)

307

249

255

257

264

Number of introductory interest-free purchase deals

62

67

58

59

58

Average interest-free balance transfer term (days)

613

553

517

518

522

Number of introductory interest-free balance transfer deals

68

73

61

61

60

Average balance transfer fee

1.95%

2.26%

2.40%

2.44%

2.42%

Data based on the start of the month.

Source: Moneyfacts Treasury Reports

 

Loan market analysis

Unsecured personal loan average rate (APR)

Jun-22

Jun-23

Mar-24

May-24

Jun-24

£3,000 over three years

14.3%

16.4%

17.6%

17.3%

17.2%

£5,000 over three years

7.4%

9.4%

11.5%

11.4%

11.7%

£7,500 over five years

5.2%

7.2%

9.0%

8.6%

8.6%

£10,000 over five years

5.2%

7.2%

8.9%

8.6%

8.6%

Average interest rates based as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Credit card market analysis

 

Jun-22

Jun-23

Mar-24

May-24

Jun-24

Average purchase APR (includes fee)

26.7%

31.2%

34.7%

35.1%

35.3%

Average purchase rate per annum

23.834%

25.359%

25.659%

25.767%

25.860%

Average interest-free purchase term (days)

307

249

255

257

264

Number of introductory interest-free purchase deals

62

67

58

59

58

Average interest-free balance transfer term (days)

613

553

517

518

522

Number of introductory interest-free balance transfer deals

68

73

61

61

60

Average balance transfer fee

1.95%

2.26%

2.40%

2.44%

2.42%

Data based on the start of the month.

Source: Moneyfacts Treasury Reports

 

Loan market analysis

Unsecured personal loan average rate (APR)

Jun-22

Jun-23

Mar-24

May-24

Jun-24

£3,000 over three years

14.3%

16.4%

17.6%

17.3%

17.2%

£5,000 over three years

7.4%

9.4%

11.5%

11.4%

11.7%

£7,500 over five years

5.2%

7.2%

9.0%

8.6%

8.6%

£10,000 over five years

5.2%

7.2%

8.9%

8.6%

8.6%

Average interest rates based as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Rachel Springall, Finance Expert at Moneyfacts, said:

“The cost to borrow on credit cards has reached a record high, making it vital for borrowers to repay their debt if it’s bearing interest, or switch it to an interest-free offer. However, the cost to transfer debts has also risen over the past quarter, and consumers looking for a 0% purchase offer will find the availability of products stalled. The cost of living may result in some borrowers turning to short-term credit, such as a credit card or their overdraft, but due to the cost of interest, these should only ever be used temporarily to cover essential or unexpected expenses.

“A recent study by UK Finance revealed that over the 12 months to February, outstanding balances on credit card accounts grew by 9.5%. As the number of 0% purchase deals stalled this quarter and the number of 0% balance transfer offers fell, providers may well be cautious surrounding such a rise and conscious of those who remain in persistent debt. Borrowers will need to carefully plan their repayments to ensure they are in the best possible position to pay off their debts as soon as they can. One way to do this quickly is to change a minimum repayment to a higher fixed sum every month, which can be changed back should the need arise.

“An unsecured personal loan could be ideal for borrowers who want a fixed monthly repayment plan and know exactly when their debts will be repaid. However, the cost to borrow £5,000 over three years has risen to its highest level in over a decade. Borrowers will need to decide whether a loan is the right choice versus a more flexible credit card, but they can seek advice if they are unsure. Seeking advice from a debt charity or asking for support from an existing lender is always wise to better manage repayments and find out ways to avoid high interest charges.”

Rachel Springall, Finance Expert at Moneyfacts, said:

“The cost to borrow on credit cards has reached a record high, making it vital for borrowers to repay their debt if it’s bearing interest, or switch it to an interest-free offer. However, the cost to transfer debts has also risen over the past quarter, and consumers looking for a 0% purchase offer will find the availability of products stalled. The cost of living may result in some borrowers turning to short-term credit, such as a credit card or their overdraft, but due to the cost of interest, these should only ever be used temporarily to cover essential or unexpected expenses.

“A recent study by UK Finance revealed that over the 12 months to February, outstanding balances on credit card accounts grew by 9.5%. As the number of 0% purchase deals stalled this quarter and the number of 0% balance transfer offers fell, providers may well be cautious surrounding such a rise and conscious of those who remain in persistent debt. Borrowers will need to carefully plan their repayments to ensure they are in the best possible position to pay off their debts as soon as they can. One way to do this quickly is to change a minimum repayment to a higher fixed sum every month, which can be changed back should the need arise.

“An unsecured personal loan could be ideal for borrowers who want a fixed monthly repayment plan and know exactly when their debts will be repaid. However, the cost to borrow £5,000 over three years has risen to its highest level in over a decade. Borrowers will need to decide whether a loan is the right choice versus a more flexible credit card, but they can seek advice if they are unsure. Seeking advice from a debt charity or asking for support from an existing lender is always wise to better manage repayments and find out ways to avoid high interest charges.”

Notes to editors

Pioneering financial comparison technology for over 35 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 35 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 35 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 35 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
Caitlyn Eastell Apprentice Press & PR Assistant