The cost of using a credit card has hit an almost two-decade high this month. According to data from Moneyfacts, the average credit card APR (annual percentage rate) reached 35.7% between March and June 2025, up from 35.3% in June 2024 and 31.2% in June 2023. This was the highest average rate recorded since Moneyfacts began collecting such data in June 2006.
Rachel Springall, a finance expert at Moneyfacts, said: "Consumers who use their credit cards for everyday purchases will be disappointed to see borrowing costs rise to the highest point since records began, almost two decades ago."
Are credit cards getting more expensive?
Moneyfacts calculated that the average credit card APR (annual percentage rate) has risen to a new high in the last three months. The APR is essentially the total cost of the card in a year, including account fees, extra charges and interest. However, credit card APR is based on a few assumptions that may not apply to all users. These include a constant balance, regular purchases and consistent repayments. It also does not take into account any limited-time 0% interest offer.
This means that while the average cost of borrowing money with a credit card has technically increased, it is not all doom and gloom for credit card users. Moneyfacts also found that the number of 0% purchase credit card offers rose to 64 for March to June 2025. This was the highest number recorded since 64 were on offer in 2023. The 0% purchase deals on offer have also grown longer, rising to an average of 286 days from the 267 days recorded in March. This is the longest average 0% purchase period recorded by Moneyfacts since October 2022, when it stood at 300 days. Currently, the best available 0% purchase period is 25 months, or 750 days.
What about balance transfer credit cards?
The same trend can be seen for 0% balance transfer deals, with the latest Moneyfacts data showing the number of offers rising from 65 to 67, the most recorded since 2023. The length of these deals are also increasing, up to an average of 536 days in June 2025 from 529 days in March 2025. This is the longest average 0% balance transfer period recorded by Moneyfacts since September 2023, when it stood at 543 days.
Currently, the best available 0% balance transfer period is 34 months, or 1,020 days. Unfortunately, the upward trend applies to balance transfer fees, too. The average charge hit 2.5% this month, up from 2.42% this time last year.
Do you need a 0% credit card?
It is important to consider all of the costs of getting a 0% credit card before you apply. For balance transfer credit cards, this will mostly be the balance transfer fee, though keep in mind that there are some no-fee options, albeit with much shorter 0% periods.
Rachel Springall, a finance expert at Moneyfacts, said: "Those who want to spread the cost of their purchases may find it encouraging that providers have improved their 0% purchase and balance transfer deals during (the second quarter of) 2025, however, the cost to move debts rose, making it essential for borrowers to weigh up the up-front costs and lengthy interest-free terms."
With all 0% credit cards, you will still need to make at least the minimum payment each month. How this is calculated can vary between providers, so make sure you understand how much you will need to pay each month to maintain your 0% period. You will also need to make sure you clear the debt before the 0% period ends to avoid interest charges. We explain more in our article ‘What is the minimum payment on a credit card?’.
Keep in mind that many providers offer a headline 0% period of ‘up to’ a certain number of months. This means that not all successful applicants will get the full period, and some may be offered far fewer months.
What are the alternatives to a credit card?
If you think a credit card is too expensive, the obvious alternative is a loan. According to Moneyfacts data, loans have been heading in the opposite direction to credit cards. The average APR taken from a range of personal loans fell from March to June 2025. Moneyfacts used the example of a £3,000 loan borrowed over a three-year term and calculated the average APR as 16.8% in March 2025, with a fall to 16.4% for June 2025.
Remember that this is just an example and that the averages recorded by Moneyfacts may not be the actual rate you receive. What you are offered will be based on your own financial circumstances, your credit history and the lending criteria of the loan provider. All applications are subject to a hard credit check and lender rules.
How to get the best deal on a credit card
The best way to make the most of your credit card is to ensure you are paying as little as possible on interest and fees, and you have the right credit card for your needs. For example, you may want the best credit card for rewards, the best credit card for cashback, the credit card with longest 0% purchase period or the top 0% balance transfer credit card. We regularly update our table of the top credit cards on our 'Best credit cards in the UK' page.
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