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Rhiannon Philps

Content Writer
Published: 25/06/2024
a person handing over their credit card

As credit card borrowing becomes more expensive, the number of interest-free deals drops year-on-year.


The average purchase annual percentage rate (APR) on credit cards rose from 34.7% at the start of March 2024 to 35.3% at the start of June 2024, according to the Moneyfacts UK Unsecured Lending Trends Treasury Report.

This is the highest this figure has been since Moneyfacts started recording this data in June 2006.

Credit card interest rates have risen steadily over the last couple of years, with the average purchase APR standing at 31.2% in June 2023 and just 26.7% in June 2022.

What is APR?

APR, or annual percentage rate, tells you how much it will cost you to borrow over the course of one year, taking into account the interest rate and any fees that are charged as standard.

“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,” commented Rachel Springall, Finance Expert at Moneyfacts.

However, while moving your debt from a credit card that charges interest to a 0% balance transfer card could save you a significant sum of money, this process has also become more expensive over the last couple of years.

At the start of June 2022, the average balance transfer fee stood at just 1.95%. This increased to 2.26% in 2023 and rose once again to 2.42% in June 2024.

How do balance transfer credit cards work?

If you’re paying interest on your credit card debt, you may be able to move it to a 0% balance transfer card. You will usually need to pay a transfer fee (a percentage of the total balance) and you won’t be charged interest for the specified period, as long as you meet the terms of the card and repay the debt in full before the end of the interest-free period.

Interest-free options

Although there are fewer interest-free purchase and balance transfer credit cards on the market than there were in June 2023, there are still a range of deals to choose from.

There were 58 purchase credit cards with an introductory 0% period on offer in June 2024, the same number that were available in March, while there were 60 interest-free balance transfer credit cards available in June (down from 61 in March).

Furthermore, the average interest-free period on purchase credit cards rose from 255 days in March to 264 in June 2024. This is also longer than the average 0% purchase term in June 2023, when it stood at 249 days.

As a result, credit card holders have slightly more time to clear their balance before interest charges start applying.

The average 0% period on balance transfer cards also increased between March and June 2024, rising from 517 days to 522. However, this is 31 days shorter than the average 0% period that was available one year ago.


Credit card market analysis
  June 2023 March 2024 June 2024
Number of introductory interest-free purchase deals 67 58 58
Average interest-free purchase term (days) 249 255 264
Number of introductory interest-free balance transfer deals 73 61 60
Average interest-free balance transfer term (days) 553 517 522

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

What about loans?

Unlike credit cards, the average APR for many unsecured loan tiers fell between March and June 2024. For example, the average rate on loans of £3,000 over three years dipped from 17.6% to 17.2%, while the average rate on loans of £7,500 over five years dropped from 9.0% to 8.6%.

However, the average APR on loans of £5,000 over three years rose slightly to 11.7%, its highest level in over 10 years.

“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,” Springall noted.

Compare personal loans

You can compare personal loans and check your eligibility for a loan without affecting your credit score.

On the other hand, credit cards offer more flexibility with repayments which, when managed effectively, can be an affordable way for consumers to spread the cost of expensive purchases or unexpected expenses, for example.

However, if you don’t keep on top of your payments and you allow debt to build up, credit cards can become an expensive and risky form of borrowing.

Dealing with debt

Outstanding balances on credit cards grew by 9.9% in the 12 months to March 2024, with 49.8% of this debt incurring interest, according to the most recent Card Spending report from trade body UK Finance.

Taken together with the rise in credit card interest rates, this could indicate that more borrowers may be at risk of struggling with their repayments and falling into persistent debt.

What is persistent debt?

An individual is defined as being in persistent debt when they have paid more in interest and other charges over an 18-month period (or longer) than they have repaid on their credit card balance. If this happens, a credit card provider will contact you to offer help and to let you know your options.

“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,” Springall explained.

“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,” Springall pointed out.

If you’re finding it hard to manage your credit card debt and make your repayments, it’s important to contact your card provider as soon as possible. You can also contact a debt charity for free support and advice on your situation.


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