Record-breaking 0% Credit Card for Spending Deals

By: MoneyFacts

It’s impossible to plan for unexpected expenses, so those caught by surprise with breakdowns of white goods or even the necessity to replace a car will likely be hard-pressed to cover the cost at short notice. Fortunately for consumers who may not have a large enough nest-egg to dip into, there are an abundance of interest-free purchase credit cards to choose from that can help spread the cost.

In fact, the latest research by Moneyfacts.co.uk reveals that the length of an interest-free deal on purchases has grown to its longest ever term, with Halifax offering the longest ever 0% purchase card at 30 months, which is an entire year longer than the Best Buy on offer five years ago.

Half of the overall credit card market now offers interest-free purchase deals (104 cards), and 53% (55) of the 0% deals on offer are for six months or more, with 35% (37) offering 12 months or more.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“It’s encouraging to see rivalry in the credit card market, which is particularly good news for customers looking to make a large purchase. Today, there are deals available that could give them an entire year more interest-free, if you were to compare the current Best Buy with the best deal available five years ago. With this extended time to repay their debts, these types of cards could significantly help those faced with an emergency purchase who have no other means to cover the unexpected cost.

“Whilst the number of interest-free purchase cards has remained relatively stable over the years, it’s the deals themselves that have improved immensely, as card providers continue to leap-frog to the top of the Best Buys.

“The average length of a 0% interest-free purchase deal has increased by more than two-thirds (77%) over the last five years, from 176 days to 312 days. Even if customers don’t apply for the longest deal, half of the interest-free market for purchases still provides six months or more at 0%, which can make a big difference to consumers who have run out of options to pay for goods or a service.

“Those customers who make a £5,000 purchase on a 30-month 0% purchase credit card would have a much more manageable monthly repayment than if they had taken out a credit card with a 12-month interest-free deal and aimed to pay it back within the year. Whilst borrowers may have the best intentions to repay the debt over the short-term, it isn’t always possible, and it’s all too easy for borrowers to fall back and make miniscule repayments each month, resulting in debt staying on the card far beyond the interest-free offer. As an example, borrowers could make 30 repayments of £167 with Halifax, or if they choose a one-year 0% deal make 12 repayments of £417 to clear the £5,000 before interest applies.

“Whichever option customers choose to help them manage their money, they ideally need to have a glossy credit rating to be eligible for the best deals. Therefore, it’s vital they review their credit score, for instance with Experian, check credit limits across their cards, and above all else keep up with regular repayments on any debts, to be viewed favourably by lenders.”

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Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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