0% offers improve as credit card APRs hit record high over summer

4 min Read Published: 24 Sep 2021

0% offers improve as credit card APRs hit record high over summerBetween the start of June and the end of August 2021, the average purchase credit card APR (annual percentage rate) rose to a record high of 26.0%, according to data from Moneyfacts UK.

However, a number of introductory offers have had their terms extended, meaning customers can benefit from 0% deals for a longer period before the standard APR kicks in.

In this article, we take a look at what’s going on in regard to credit cards and their introductory offers.

What is happening with credit cards?

Over the summer months, the average purchase APR (which includes card fees) on UK credit cards rose to 26.0%, the highest recorded on Moneyfacts’ records. This figure has been rising steadily over the past few years, up from 25.2% in 2020 and 24.7% in 2019.

A combination of changes has contributed to this rise, Moneyfacts says, including rate increases among some of the lowest rate cards, new card launches, and some card withdrawals.

Some of the most popular low-rate credit cards increased their rates, with Natwest, RBS and Ulster Bank all raising their 9.9% APR cards to 12.9%, while TSB hiked its previously market-leading 7.9% APR offer to 9.9%.

There are now only three cards on the entire UK credit card market which offer APR at less than 10%, from Lloyds Banking Group, Tesco Bank, and TSB.

However, fees on balance-transfer credit cards have dropped year-on-year, falling from 2.28% to 2.1% in September 2021. It’s the lowest these fees have been since June 2018, when the average was 2.07%.

The following table outlines the recent changes across the UK credit card market.

Credit Card Market Analysis September 2019 September 2020 June 2021 August 2021 September 2021
Average Purchase APR (includes fee) 24.70% 25.20% 25.40% 25.90% 26.00%
Average Interest-Free Purchase Term (days) 336 280 285 318 316
Number of Introductory Interest-Free Purchase Deals 70 53 56 58 59
Average Interest-Free Balance Transfer Term (days) 540 529 550 546 548
Number of Introductory Interest-Free Balance Transfer Deals 78 57 59 61 61
Average Balance Transfer Fee 2.29% 2.28% 2.12% 2.13% 2.10%

Source: Moneyfacts UK Unsecured Lending Trends Treasury Report.

What are the new 0% offers?

Along with better balance-transfer fees, introductory offers across the credit card market have improved over the summer months too. Tesco Bank recently increased the 0% term on its Purchases credit card from 20 to 22 months, while Barclaycard has extended the offer period on its Platinum card from 20 to 21 months. Make sure to check out our reviews of the Tesco Bank Purchases card and the Barclaycard Platinum card.

Meanwhile, balance-transfer offers have also improved, with Sainsbury's Balance Transfer credit card increasing its interest-free period from 28 months to 29, while it still boasts competitive 2.00% fees. Alternatively, Santander’s Everyday Long Term Balance Transfer credit card has 0% interest on balance transfers for all successful applicants for a market-leading 31 months, although with a slightly higher 2.75% fee.

Plus, keep an eye on TopCashback, which could get you up to £30 cashback when using Santander's Everyday No Balance Transfer Fee credit card.

Successful applicants for 0% purchase cards from M&S and Barclaycard will also get a guaranteed 22 and 20 months on balance transfers respectively.

More of the best credit cards

For more details on the best credit cards in the UK, check out the following links: