The number of balance transfer credit cards – designed to help borrowers manage their debt – has fallen by nearly a third over the past year, according to independent financial data group, Defaqto. There are now just 66 of the deals available on the market, compared to 94 a year ago.
Smaller chance of switching debt
Balance transfer credit cards allow borrowers to shift existing expensive credit card debt onto one that charges cheaper interest for a set period. Some even charge 0% interest – although usually in exchange for a percentage fee of the debt transferred.
The available interest-free windows on these cards are also shrinking, found the research. TSB Platinum currently offers the longest 0% term at 29 months (for a 2.95% fee), which compares to 34 months two years ago.
Banking expert at Defaqto Katie Brain said: “It is easy for the cost of borrowing to creep up, especially if you have a credit card with an introductory offer, which has ended. There are not as many deals available now and they are disappearing fast, so it is worth checking to see if you can get a better rate with a new provider.”
Always use an online eligibility checker before applying to protect your credit score.
Rising unemployment, falling income
The dwindling card options available for those with personal debt coincides with the wider tightening of the national purse strings. The UK unemployment rate grew to 4.5% between June and August, according to new figures from the Office for National Statistics compared with 4.1% in the previous quarter – while redundancies climbed to their highest level since 2009.
Even those still working are preparing to forgo their bonuses this year, according to separate real-time data published by YouGov. It found that almost a quarter (23%) of workers had anticipated a bonus would be paid at some point during 2020, yet only 15% now expect to receive it before the year is out.
But while ‘off-the-peg’ coronavirus payment holidays on credit cards (as well as other household bills including mortgages, loans and insurance) close on 31 October, regulator the Financial Conduct Authority has confirmed it will extend support on a tailored basis for those who are still struggling to make payments as a result of coronavirus.
If you are worried about debt, contact a free debt advice charity, such as StepChange.