49.7% rise in consumers looking to get interest free credit cards

New research by money.co.uk has shown that there has been 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.

The research showed that the 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%,  whilst31% 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.

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.

Salman Haqqi, credit card expert at money.co.uk said “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.”

“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.”