By 
The best credit card deals have disappeared from the market in the past 12 months, following a warning from the City watchdog that customers were becoming overly reliant on cheap debt.
The Financial Conduct Authority (FCA) concluded its investigation into the credit card market last spring and called on banks to ensure customers paid back their debt as quickly as possible.
But the regulator’s intervention is cited as a major reason for the disappearance of lengthier interest-free deals since then.
In the past year the best 0pc balance transfer credit card has shrunk from a 37-month interest-free period to 32 months, according to data provider Moneyfacts.
Rather than reducing a customer’s overall borrowing costs, the withdrawal of the best cards may mean that borrowers are charged more in fees, given they will be moving their balances more frequently.
One of the top cards on the market today, from Post Office Money, offers an interest-free 32 months to customers, but will charge a 2pc fee to shift a balance across from another provider. A rival 30-month card from Sainsbury’s Bank charges a 3pc fee.
For a customer moving a £3,000 balance, this would amount to a £60 fee with the Post Office and £90 to move to Sainsbury’s Bank. By being hit with balance transfer fees more frequently, the overall cost to the consumer could be higher in the long run.
Some cards allow customers to move existing balances without an upfront fee, but the terms on these cards are usually much less favourable than those charging fees.
Rachel Springall, of Moneyfacts, said: "As with any credit card debt, borrowers would be wise to make every effort to pay more than the minimum repayment if they can afford to do so.
“If borrowers fail to shift their debt before their interest-free offer has expired, they might have to pay another fee to make another balance transfer elsewhere if they want to avoid interest charges."
Comments