This week, it was revealed that the average 0% credit card deal is actually getting longer. However, recent research suggests that the number of 0% deals available has shrunk significantly over the past five years.
So, if you’re on the lookout for a new 0% balance transfer credit card and you don’t qualify for the top cards, your options are actually getting increasingly limited. Here’s what you need to know.
What was revealed about credit cards this week?
According to Moneyfacts, the average 0% period on a balance transfer credit card now exceeds 600 days. This is the highest average figure seen since 2018. It’s a similar story for 0% purchase credit cards, with average interest-free periods standing at 307 days. That’s up from an average of 303 days in December last year.
However, while the average deal is getting longer, bear in mind that to get yourself a 0% credit card you’ll need to have a decent credit score. That’s because every time you apply for a credit card, you need to pass a credit check. So if you have a poor credit score or a limited credit history, you’ll be less likely to qualify for the top cards.
If that’s you, then it’s worth paying attention to other research this week highlighting that the number of 0% deals on both balance transfer and 0% purchase cards has fallen significantly over the past five years.
According to Defaqto, there are 36% fewer 0% balance transfer deals now than in 2017. Meanwhile, there are 25% fewer 0% purchase deals available.
Importantly, it’s likely that the number of deals will continue to shrink in future, given that the Bank of England is widely expected to increase interest rates more than once as the year progresses. In fact, a rise is on the cards as early as Thursday 17 March, which is the date of its next base rate meeting.
What is significant about fewer 0% deals?
We all know that the UK is facing a significant cost of living crisis. Therefore, it’s expected that many will hope to turn to 0% credit cards in order to help with the financial pain.
The news that the number of 0% deals is shrinking signifies that these types of cards are becoming less common. This means some could soon find themselves unable to get 0% credit card deals that they might have expected to qualify for.
So, if you think you may need a 0% credit card, either now or in the near future, it may be a good idea to act sooner rather than later before they’re even more scarce.
What 0% credit cards are available right now?
Before opting for a 0% credit card, you’ll need to determine which type of credit card is right for you. If you want to shift debt, then go for a 0% balance transfer. If you’re looking to make purchases, then a 0% purchase credit card will fit the bill.
Bear in mind that the below deals are all market-leading. To view cards that you’re most likely to be accepted for, try our credit card eligibility checker.
0% balance transfer cards
If you have existing credit card debt and want to transfer your balance, then the longest 0% balance transfer card available right now is from Sainsbury’s Bank. Its card gives cardholders the option to transfer existing credit card debt and not pay any interest on it for up to 32 months. However, there is a 2.24% fee that applies to anything you shift across.
However, some applicants could be offered just 24 months at 0% and a higher 3% fee. Of course, others may not be accepted for the card at all. The representative APR is 21.9%.
Alternatively, the longest 0% balance transfer card without a fee is offered by Santander. Its card gives a decent 21 interest-free months. The representative APR on this card is 20.9%.
With balance transfer credit cards, ensure you fully repay your balance before the end of the interest-free period to avoid paying interest. Also, ensure you make at least the minimum payment each month to keep the 0% deal.
For more options, take a look at The Motley Fool’s top-rated balance transfer credit cards.
0% purchase cards
If you’re looking to borrow at 0% on new purchases, then two cards offer the longest 0% period available right now.
Sainsbury’s Bank offers 0% on spending for 24 months, though some applicants will be offered just 16 months. The representative APR on this card is 21.9%.
Meanwhile, Barclaycard also offers 24 interest-free months on new spending. However, some people applying for this card will offered just 12 interest-free months. The representative APR is 21.9%.
While 0% purchase cards can facilitate cheap borrowing, never use them as an excuse to spend more than you normally would. Make sure you clear your full balance before the interest-free period ends to avoid paying any interest. Also, keep in mind that you must make at least the minimum monthly payment to keep your 0% deal alive.
For more options, see The Motley Fool’s list of top-rated 0% purchase credit cards.
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About the author
Karl is a writer specialising in investing and personal finance content. He regularly contributes articles on savings, bank accounts, mortgages, and loans. He was previously a Personal Finance Writer for MoneySavingExpert.
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