The average introductory interest-free period being offered on balance transfer credit cards has surpassed 600 days for the first time in nearly four years.
The typical interest-free balance transfer term on credit cards is now 602 days, according to Moneyfacts.co.uk, which said it is the first time the period has topped 600 days since May 2018.
The findings could be good news for those looking to shift debts around in order to pay less for servicing the debt, especially as the nation prepares to face a tighter financial squeeze on household budgets. However, people will need to bear in mind any fees for transferring the balance.
It may also help anyone whose balance is beginning to edge closer towards their agreed borrowing limit as new card spending data for January, released today by UK Finance, shows that after several months of falls, outstanding balances on credit cards have started to creep up again with balances up 3.8% year on year.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown: “Today’s data shows further signs the pandemic savings boom is unravelling with outstanding credit card balances on the rise after months of decline.
“Subdued spending habits during the pandemic meant we could put more away for a rainy day and we were less likely to put purchases on the plastic and not pay them off in full.”
The finance expert explained how there was always going to be something of a “financial hangover post-Christmas”, but the concern is that these outstanding balances are also a sign that the rising cost of living is starting to bite.
She added: “We are increasingly having to burn our way through our lockdown savings to meet everyday expenses and using our credit cards more to fill any gaps.”
Rachel Springall, a finance expert at Moneyfacts, said: “As the cost of living rises, consumers may be tempted to reduce their credit card repayments and, while this is a nice flexible feature to have in times of need, it’s imperative borrowers are mindful of their debts, any interest-free deal that may be coming to an end, and switch if they want to avoid incurring interest.
“Not every borrower will be eligible for a headline grabbing deal, but it’s always wise for consumers to check their credit score before they apply, such as with Experian.
“If customers are struggling to keep up with their repayments amid the rising cost of living, they would do well to seek help from a debt advice charity.”
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