Interest-free credit cards ‘vanishing’

The number of interest-free credit cards available to consumers has fallen to a record low.

The cost of transferring debt to 0 per cent balance transfer cards – designed to help borrowers slash the cost of their debt – has also soared, figures show.

And shorter deals mean borrowers also have less time to clear their balance before interest is added.

Interest-free credit cards are supposed to help borrowers repay their debt faster as they do not have to pay any interest for the duration of their deal. But experts warn that as banks face tough new rules around lending to those in persistent debt, more interest-free cards will disappear.

In September there were just 87 such deals available – the lowest number since 2006, when analysts Moneyfacts’ records began. This is down from 101 in June.

Virgin Money and Post Office Money are among providers which have withdrawn 0 per cent balance transfer deals or cut the interest-free period. Credit card fees are also on the rise, up from an average rate of 2.04 per cent in January to 2.2 per cent today.

A Moneyfacts spokesman said those already struggling with persistent debt could suffer most as they may have to pay out more in balance transfer fees – and also be more likely to fail to repay their balance before the shorter deals end.

experts say tough rules announced by City watchdog the Financial Conduct Authority, meant to help those with persistent debt, are partly to blame for the lack of interestfree deals. But the FCA said this was unlikely because these are more easily accessed by those with high, not low, credit scores.