Rachel Springall, Finance Expert at Moneyfacts, said:

“The market for unsecured lending across credit cards and loans noted a contraction in the number of providers during Q3 2024, which has subsequently narrowed the choice of offers for borrowers. Sainsbury’s Bank withdrew from the loans and credit card market, and Metro Bank withdrew from the credit card market, which has resulted in the lowest number of credit card providers seen on our records and the lowest count of loan providers seen in over a decade. Interest rates are also on the rise for unsecured lending, the average credit card APR and the rates charged on multiple unsecured personal loan tiers rose during Q3 2024.

“Those borrowers searching for an introductory 0% credit card deal may be disappointed to see both the average terms for purchases and balance transfers reduced during Q3 2024. These deals would typically become more popular as we approach the festive season for those looking to spread the cost of their purchases, or indeed shift an existing debt to an interest-free balance transfer offer to give themselves more time to pay it off. Borrowers who are looking for a new balance transfer offer would be wise to watch out for transfer fees, while these have not risen over the last quarter, at 2.42%, it is higher year-on-year, up from 2.29%. However, borrowers can still find 0% balance transfer offers that do not charge a transfer fee, but they will usually have a much shorter interest-free term.

“Borrowers looking to consolidate their debts will need to compare deals carefully but note that around 56% of the market now consists of loans restricted to those with an existing relationship with the lender. Average loan rates may have risen over the quarter for loans tiers of £3,000 up to and including £10,000, but an unsecured personal loan could still be a better choice for consumers versus a credit card, as they offer a fixed repayment plan. Credit cards are typically more suited for those who might need to drop down their minimum repayments temporarily, but borrowers should make every effort to pay off their debts before interest applies. Those struggling with their debts should seek advice from a debt charity or ask their lender for support to try and avoid a debt spiral.”