Banks have reinstated or ramped up balance transfer deals over the past month as they ease up on lending spigots, but borrowers looking to clear their debts still have fewer options than ever.
MBNA, Sainsbury’s Bank and Virgin Money have all extended interest-free terms on some of their cards, while the supermarket lender also reopened its doors to non-Nectar customers last October after closing shop at the start of April 2020.
It now offers the best 0 percent deal on the market, with up to 29 months for borrowers to settle their debts for 3 percent, although some applicants will have less time to pay back.
Those looking to move their debt into an interest-free deal can take advantage of banks recently increasing term lengths by 0%.
Meanwhile, MBNA increased the duration of interest-free balance transfer terms on two of its cards from 18 and 26 months to 20 and 28, respectively, while also lowering the balance transfer fee on its 28-month deal by 0% from 2.99 to 2.79 percent. .
The moves likely indicate that lenders have a greater appetite for new business amid greater confidence in the UK economy’s recovery.
Credit review agency Experian told This is Money that there were nearly twice as many credit cards available on its website as there were when availability was at its lowest, during the initial shutdown.
It said more card providers had joined over the past month, though banks denied the moves were out of the ordinary.
“It is encouraging that while demand has grown, lenders have also been able to continue to offer a variety of credit products,” said Amir Goshtai of Experian.
“This points to positive signs for the UK credit economy, especially when compared to the first lockdown.”
However, TSB cut its previously market-leading 0 percent period from 29 months to 28 on Wednesday, while its slightly lower fee of 2.95 percent means the best balance transfer deal just got a little more expensive.
Sainsbury’s also raised the cost of transferring balance to the low fee card for 26 months from 1.85 per cent to 2 per cent of the amount being transferred.
| Bank | Old deal | new deal | date of change |
|---|---|---|---|
| Sainsbury’s Bank | Balance transfer credit card: 28 months without interest on balance transfer Low Fee Balance Transfer Credit Card for 26 Months: 25 months interest free balance transfer – 1.85% fee Double credit card: 20 months without interest on balance transfers and purchases Low Fee Balance Transfer Credit Card for 18 Months: 18 months interest-free on balance transfer – no fees |
29 months without interest 26 months interest free – fees raised to 2% Interest-free term for balance transfers and purchases reduced to 19 months Fees have been increased from 0% to 0.5% in some cases |
December 22nd |
| Mbna | 0% credit card transfer: 18 months interest free on balance transfers and purchases – BT fee of 2.75% 0% Long Balance Transfer Credit Card: 26 months interest free – 2.99% fee |
20 months interest free – Fee raised to 2.99% 28 months interest free – fees reduced to 2.79% |
Jan 7th |
| TSB | Platinum Credit Card for Balance Transfer: 29 months interest free balance transfer – 2.95% fee | 28 months without interest | Jan 6 |
| Bakr money | Balance transfer credit card: 25 months without interest on balance transfer Universal credit card: 18 months without interest on balance transfers and purchases |
26 months without interest 18 months without interest on balance transfers and purchases |
December 14th |
| Source: Moneyfacts.com | |||
And despite these recent improvements, the availability of interest-free credit card deals also remains at an all-time low.
There were 55 balance transfer deals available on Moneyfacts on Friday, down from 60 at the start of December and 75 in December 2019. And in January 2017 banks offered borrowers up to 43 interest-free months to pay off their debts.
Banks usually adjust their tenure lengths in January as they crowd out new business, as households often look to cut the cost of Christmas spending, but there were fewer moves this year than usual, according to Moneyfacts.
The slight rebound in balance transfer deals comes after banks tightened the availability of unsecured credit such as credit cards and loans between July and September last year, and were expected to do so again in the last three months of the year, according to a survey of lenders. Bank of England.
“Borrowers using a 0 percent deal will also find time to repay before the interest defaults, so they’re more inclined to pay off debt sooner than they were years ago,” Rachel Springol said.
Britons have largely avoided their credit cards over the past 12 months during coronavirus lockdowns, with record amounts of personal debt being paid off since the first in March.
Another £900m of credit card debt was paid off in November, according to the Bank of England, while only 53.9 per cent of credit card balances were interest-bearing in September, according to UK Finance Trade.
Borrowers who are in debt can apply for a payment holiday on their credit card or personal loan for up to six months, provided they don’t take a payment break.
They must apply by the end of March 2021 and all pay holidays will end in July.
‘It’s a positive sign that card debt has been paid off, but there may still be those who are in debt and should seek advice from a debt charity if they need help,’ Rachel Springol added, while those with bad credit history are also unlikely. To be accepted for the longest interest free term available in the market.
What about a card with no fees?
Borrowers who are happy to pay off their balance in a short amount of time may also want to consider a balance transfer card that doesn’t come with a fee.
There are fewer available than last year but seven deals are still available, though This is Money only includes those cards that don’t come with the same fees.
Of the five with no fees, the longest are offered by Sainsbury’s Bank and Santander and come with 18-month interest-free terms.
| Credit card | April rep | Long term without interest | Minimum payment |
|---|---|---|---|
| Santander Everyday Credit Card MasterCard | 18.9% | 18 months | 1% or £5 per month |
| Sainsbury’s Bank Low Balance Transfer Fee for 18 months on the Mastercard credit card | 21.9% | 18 months | 2.25% or £5 per month |
| Barclays Platinum Card for 15 months, without balance transfer fees | 21.9% | 15 months | 2.25% or £5 per month |
| Danske Bank Standard MasterCard | 22.9% | 5 months | 3% or £5 per month |
| TSB Advance Credit Card from MasterCard | 7.9% | 3 months | 1% or £5 per month |
| Source: moneyfacts.com | |||
However, Sainsbury’s low-fee card may charge you 0.5 per cent in some cases, while it comes with 0 per cent interest-free on purchases for three months and an annual interest rate of 21.9 per cent – although most use a balance transfer card To transfer and pay off debts instead of adding to them.
Meanwhile, Santander’s Everyday MasterCard credit card has an APR of 18.9 percent and also offers 0 percent interest-free on purchases for three months.
Its term of 18 months starts from the date of transfer, unlike the Sainsbury’s Card which starts from the date the card is issued.
The trade-off means that in exchange for no fees, borrowers have less time to pay off the balance, which means higher payments each month.
| The balance being transferred | Balance transfer fee with Sainsbury’s Bank | Monthly payment with Sainsbury’s is required to clear balance in 29 months | A monthly payment with Santander is required to clear the balance in 18 months |
|---|---|---|---|
| £3,000 | £90 | £103.45 | £166.67 |
| £5,000 | £150 | £172.41 | £277.78 |
| £10,000 | £300 | £344.82 | £555.56 |
We compare how much extra this would cost compared to the longest tenure available on the market, a 29 month Sainsbury’s with a 3 per cent fee, if borrowers wish to transfer £3,000, £5,000 or £10,000.
Sainsbury’s turns from £3,000 to £3,090, £5,000 to £5,150 and £10,000 to £10,300, but cuts the required payments by £63, £105 and £211 per month respectively.
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