49.7% More People Want Interest Free Credit Cards This Year
New research by money.co.uk has confirmed a 49.7% rise in consumers looking to get interest free credit cards this year, likely due, in part, to the cost of living crisis. According to a recent survey, 12% of UK card holders are now using credit cards more than usual, to cope with the increased cost of living in the first half of March 2022.
Key data include:
Average Searches for ‘interest free credit card’ rose from 18.1k in Dec 2021 to 27.1k in Sept 2022 – that’s 49.7%
Between April and May 2022, the effective rate on interest-bearing credit cards increased from 18.08% to 18.38%, highlighting the importance of getting an interest free credit card quickly if you can.
31% of Brits have an interest free deal currently, and with credit card interest rates on the rise since October 2020, many more people are looking to secure interest free credit cards.
Borrowing on a credit card can get expensive if you don’t pay the minimum amount back each month, because of the interest charged on your spending.
In May 2022, the average interest rate on credit card lending bearing interest was 21.39%. This was over 20% above the BoE base rate (1.25%)! As of February 2022, over half (53.8%) of UK credit card balances were bearing some level of interest, and borrowers paid £126 million a day in interest alone in April 2022.
Luckily, you can escape this trend; there are cards that offer introductory interest-free spending periods (ranging from a few months to 30 months or more) during which you won’t be charged any interest.
Money.co.uk have laid out the three types of interest free credit cards and their benefits in the table below:
Salman Haqqi, credit card expert at money.co.uk explains both the benefits and negatives of interest free credit cards: “Interest free credit cards are hugely useful for anyone wanting to spread the cost of a large purchase or pay off a chunk of debt that they would otherwise be paying interest on. If you’re looking to qualify for a credit card with lengthy interest free periods though, you’ll most likely need to have a good income and credit score.
“The main benefits are being able to borrow without paying any interest at all, which is helpful for many people going through expensive life moments such as a wedding, buying a new house or car or taking the trip of a lifetime. You also get standard credit card benefits such as Section 75 protection on purchases.
“As with all forms of borrowing, there are also some watchouts; You could get into debt if you don’t pay your card off before the 0% period end. Furthermore, it can be tempting to start making frivolous purchases during your 0% period. finally , you’ll need a great credit score in order to qualify for a card with a lengthy interest free period, so these cards aren’t actually available to everyone.”