If you’ve been looking around for a good deal on a credit card but not been able to find what you need, you’re not alone. Experts have warned that the very best credit card deals on the market are being withdrawn due to the levels of debt in the UK.
This latest crunch follows hot on the heels of the report from the Financial Conduct Authority (FCA) last year which looked into the credit card industry. Following warnings from the FCA and amid calls for debts to be repaid quickly, many low-interest deals have evaporated.
The FCA Effect
There’s no doubt that the report from the FCA
has been one of the major influencing factors in the movement of the credit
card market. The concerns that consumers were relying too heavily on credit
rather than their own finances has led to a flurry of activity - and it’s not
good news if you’re looking for cheap borrowing.
The FCA strongly suggested that lenders make
sure any debt is repaid as quickly as possible, reducing the dependence on
cheap credit to pay for everyday essentials.
The net effect of this warning is that lenders
have whipped away their best deals, leaving customers without the low-interest
rates or no-interest credit cards that made borrowing much more affordable.
Despite there being many factors causing
instability in the economy at the moment, experts have pointed to the FCA
report as being the primary cause of the disappearance of credit card deals.
Although the FCA’s primary concern was reducing
the debt of the nation, the impact of their report has the potential to cause
borrowers to end up spending more.
There are still zero-interest and low-interest
credit cards on the market, but they’re far less easier to find than before and
the terms are much stricter. For example, the longest interest-free period has shriveled
from 37 months to 32 months, according to Moneyfacts, one of the leading data
Many deals have much shorter periods than 32
months, forcing customers to keep changing to a new account to prevent paying
interest. Every time they switch, a fee will be payable, which can be up to 3%
of the balance. With multiple switches, these fees can start to mount up
meaning that borrowers will be paying substantial sums.
This means that overall, customers will actually
be clearing their debts more slowly than before - the opposite of what the FCS
It is still possible to find cards which don’t
charge a fee to transfer the balance, but these don’t offer the best terms for
those seeking out zero interest.
Manage your debts
There’s no guarantee how long the current deals
will be available for, particularly with the Brexit effect weighing heavily on
the market as well. If you can afford to pay more than the minimum to clear the
debt more quickly experts are recommending you do so to avoid having to rely on
offers and deals.