Interest-free credit card offers flourish as borrowers face “debt time bomb"

There have been positive developments for credit card customers, despite rising interest rates.

Competition among credit card providers has helped push the average introductory interest-free period on purchase and balance transfer cards to around a four-year high, data from the Moneyfacts UK Unsecured Lending Trends Treasury Report revealed.

For those wanting to spread the cost of their spending, the average 0% purchase period rose to 303 days in June, its highest level since 2022.

Meanwhile, credit card customers wanting to reduce the cost of their existing debt will find that the average 0% balance transfer period has increased to 605 days, compared to just 536 days at the same point last year.

In a further boost for those looking to move their credit card debt, the average balance transfer fee has dropped to 2.48%, its lowest point in over 12 months.

These 0% credit card offers have always been invaluable for consumers, but they may be particularly appealing now as customers are faced with record-high interest rates. Indeed, the average credit card APR, or annual percentage rate, (which includes card fees) has continued to increase, reaching 36.0% which is its highest level since at least June 2006, when Moneyfacts’ electronic records began.

“Competition has ignited on introductory interest-free card offers which could help defuse the glaring debt time bomb facing households,” Rachel Springall, Finance Expert at Moneyfacts, explained.

TSB currently offers the longest 0% balance transfer period of 38 months, as well as the longest interest-free purchase period of 26 months.

Cut hundreds off your credit card debt

The latest card spending update from UK Finance highlighted that 48% of outstanding credit card balances incurred interest in March 2026, which means many customers could be missing out on significant savings.

Indeed, Springall notes that “credit card holders who do not have a 0% offer and only pay the bare minimum back each month will have the debt sitting overhead for much longer than they might realise”.

She calculates that someone who owes £2,000 on a credit card that charges the average APR of 36.0% will take around two years to clear their debt, assuming they make a fixed payment of £115 each month. This would cost them around £700 in interest overall.

By contrast, by making a slightly higher £150 monthly payment, customers could pay off this balance in just over 12 months if they moved it to a 0% balance transfer card, without any interest costs to consider.

0% balance transfer cards allow you to move existing credit card debt (that you’re paying interest on) to a new card that gives you a certain number of months or years to clear your debt without any interest charges. However, it’s crucial to make the minimum monthly payments (at least) and clear your balance in full before the end of the 0% period, otherwise you’re likely to find expensive interest charges start to apply.

While the cards with some of the longest balance transfer periods typically charge a small percentage fee, there are several deals available that don’t come with this extra cost.

For example, Springall highlights that there is a 13-month 0% balance transfer deal available from Barclaycard that doesn’t charge a fee, as well as fee-free 12-month offers from Virgin Money and Santander.

Discover the latest balance transfer deals

Whether you want a card with an interest-free period of several years to give you plenty of time to clear your debt, or a fee-free card with a 0% period of less than one year will meet your needs, see our chart to find and compare the latest 0% balance transfer deals.

Are credit cards still worth it?

Even though interest rates have risen, credit cards can still be a useful tool for consumers. However, it’s crucial that consumers manage them effectively and keep their spending under control, otherwise there’s a risk of building up expensive debt.

For example, 0% purchase credit cards can be a popular option to buy big-ticket items or pay for a holiday, as they allow you to spread the cost over several months or years without paying interest. Furthermore, credit card purchases valued between £100 and £30,000 are covered under Section 75 of the Consumer Credit Act, which gives customers even more protection should there be a problem with the goods or services they have purchased.

Springall also adds that “a credit card can be an incredibly useful method to cover unexpected costs or cover essential purchases in times of desperation”.

“The safety net is ever greater for those who do not have sufficient savings to cover them in the event of illness or unemployment for a few months,” she continued.

However, while a credit card can be a useful tool to temporarily help you cover costs if you don’t have the money in your bank account, it’s important to only spend an amount you can afford to repay. Missing monthly payments and building up debt on a credit card could leave you facing an expensive debt burden, making you financially worse off than you were before.

If you’re struggling with living costs, it’s important to seek help as soon as possible, from a debt charity or other similar organisations that are qualified to help.