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Rachel Springall

Finance Expert & Press Officer
Published: 28/09/2023
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The cost to borrow across credit cards and unsecured personal loans is on the rise.

According to our latest data trends at Moneyfacts, the average credit card purchase APR (which includes card fees) rose to an all-time high of 31.8% APR this month. The average rate on a £10,000 loan has also risen and now stands at its highest point in over 10 years.

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0% interest-free card options fall

Borrowers now have fewer 0% interest-free credit card offers to choose from and less time to repay their debts before interest applies.

The average interest-free term on an introductory 0% balance transfer offer is now 543 days, down from 553 in June and 612 this time last year. The number of these offers has fallen to 63, down from 73 in June, which is also down year-on-year from 73 deals in September 2022.

The average balance transfer fee has also risen, which means it now costs borrowers more to move their debts. Balance transfer fees have risen to 2.29% on average, up from 1.99% a year ago, now the highest recorded since November 2020, also 2.29%.

Shoppers looking for a new 0% introductory purchase credit card will also find fewer offers and less time to repay debts.

The average interest-free purchase term on credit cards has fallen year-on-year from 295 down to 249 days. There are fewer options for borrowers to choose from than a year ago, down from 65 offers to 58, its lowest point since August 2021.

Loan rates on the rise

The average rate on a £10,000 loan over a five-year repayment term stands at 8.4%, the highest it has been in over 10 years, when it matched this figure.

Unsecured personal loans remain a good option for borrowers to consolidate their debts, but year-on-year the average rate on a loan of £10,000 with a repayment term of five years has risen by around 3%, which now costs almost £800 more in interest over a five-year term compared to a loan taken out in September 2022. There are other alternatives to these loans, such as credit cards, but these allow borrowers to be more flexible with their repayments, which may not be suitable for those who need a stricter plan to get out of debt.

Meanwhile, average unsecured personal loan rates for £5,000 over three years, £7,500 over five years and £10,000 over five years are up compared to the beginning of June 2023.

If you are looking for a new credit card, perhaps to spread the cost of any purchases in the run-up to the festive season, it’s a good idea to compare deals now. It’s also important to check your credit score before you apply.

If you are struggling with debt, it is imperative to speak to your lender and to seek advice if you are worried about missing any repayments.

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