Choice in the credit card market is being squeezed as providers take a more cautious attitude to lending, following warnings over excessive consumer spending.
The number of interest-free purchase cards available on the market has dropped by 14% in the last year, while 0% balance transfer cards have fallen by 21%, latest research has revealed.
The BoE has repeatedly expressed concerns with regards to the level of consumer debt in the UK, especially since customers are holding this debt for a longer period of time.
The FCA has found that affluent borrowers are more likely to be incurring debt on 0% credit cards compared those on low incomes.
Moneyfacts finance expert Charlotte Nelson commented: “There are growing concerns from the Bank of England that borrowers are getting themselves in a spiral of debt.
“Providers have wanted to show that they have listened to these worries and have started to reduce the interest-free terms on their deals.”
Nelson further stated that many credit card providers started to pull some of their top 0% balance transfer cards last year and that some of the most attractive 0% credit cards were now disappearing.
However, GoCompare business development director Matt Sanders said that there were still good deals available for borrowers, stating that “introductory 0% periods have been slowly getting shorter across the board".
“However, there is still a range of 0% purchase cards on the market offering periods of up to 30 months – but these rates are likely to be reserved for those with the best credit ratings.”
In April 2017, 0% balance transfer cards were available with a term of 43 months, but the period has since fallen with the longest term now 36 months.
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