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Credit Cards 0% Purchase Market Competition Heats Up

Personal_Finance / Credit Cards & Scoring May 30, 2017 - 06:06 PM GMT

By: MoneyFacts

Personal_Finance

The credit card market has seen competition ramp up of late, with lenders fighting to sit at the top of the Best Buys. In the past, the lenders’ attention was focused mainly on the balance transfer market, however, research from moneyfacts.co.uk shows that introductory purchase cards are now benefitting from this fierce competition as well, with the average number of days available interest-free for purchases having increased by 37% in just one year.


Charlotte Nelson, Finance Expert at moneyfacts.co.uk, said:

“Introductory interest-free purchase credit cards have always been a great way for borrowers to get some breathing space when buying larger items, and now borrowers have even longer to spread the cost of purchases, with the longest introductory deal period having risen by eight months in two years.

“The competition among providers has been fierce, with many trying to leapfrog each other to earn not only the top spot in the Best Buys, but also to be seen as offering the longest deal on the market. This battle was primarily focused on the balance transfer market, but as that market has started to become saturated with great offers, providers’ attention has moved on to new areas, including introductory purchase offers.

“The major concern is that these deals attract borrowers with a date that seems so far off in the distance that they might lose sight of the end of the deal and soon find it creep up on them much faster than expected. Borrowers would then be faced with a typical interest rate of 18.9%, which can be eye-watering particularly when compared to the previous interest-free period.

“0% purchase credit cards can be a useful tool, if a borrower uses the card wisely. For example, if someone borrowed £3,000 on such a credit card and paid back £100 every month, they would finish paying off the amount borrowed interest-free one month before the longest ever introductory purchase card period of 31 months finished.

“Borrowers must be disciplined about the debt they are taking on, noting the expiration of the deal in their calendar and ensuring that they set up a direct debit to repay it each month. The latter is especially important since certain cards require minimum monthly repayments for the introductory deal to remain valid. If for any reason a borrower fails to pay off the balance in the given term, there are options available to minimise the cost, such as opting for a balance transfer deal.”

www.moneyfacts.co.uk - The Money Search Engine

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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