Borrowing costs rise to a record high on credit cards - Time To Reduce Borrowing As Rates Rise

17th June 2025

Moneyfacts UK Unsecured Lending Trends Treasury Report data, which studies the UK personal finance market (Credit Cards, Personal Loans and Overdrafts), reveals the cost to borrow on credit cards rose to a record high during Q2 2025.

The average length of 0% introductory terms for purchases and balance transfers rose to its lengthiest point in almost two years. On unsecured personal loans, average rates fell to their lowest points since 2023.



PRESS RELEASE

FOR IMMEDIATE RELEASE
17th Jun 2025



Borrowing costs rise to a record high on credit cards



Moneyfacts UK Unsecured Lending Trends Treasury Report data, which studies the UK personal finance market (Credit Cards, Personal Loans and Overdrafts), reveals the cost to borrow on credit cards rose to a record high during Q2 2025. The average length of 0% introductory terms for purchases and balance transfers rose to its lengthiest point in almost two years. On unsecured personal loans, average rates fell to their lowest points since 2023.





Between the start of March 2025 and the start of June 2025 (Q2 2025), the average purchase APR (which includes card fees) rose to 35.7% APR, now at a record high according to our electronic records which started almost two decades ago, in June 2006. The average purchase PA (per annum) rate rose to 26.537% over the same period, as did the average cash PA rate to 29.999%, both hitting their highest recorded levels.
The number of interest-free purchase offers rose to 64 during Q2 2025 and stands at its highest count in almost two years (65 - July 2023). Year-on-year there are more options. The average interest-free purchase term on credit cards rose to 286 days, up from 267 days in March 2025, with terms up year-on-year. The average term is at its highest level since October 2022 (300).
The number of interest-free balance transfer offers rose from 65 to 67 during Q2 2025, now at its highest count in almost two years (70 - July 2023). There are more options for borrowers to choose from than a year ago. The average interest-free balance transfer term on credit cards rose to 536 days, from 529 days in March 2025, with terms up year-on-year, now at its highest level since September 2023 (543).
Balance transfer fees rose to 2.50% during Q2 2025, also up from 2.42% a year ago. The average fee has sat above 2% since October 2022.
Average unsecured personal loan rates for £3,000 over three years, £5,000 over three years, £7,500 over five years and £10,000 over five years have fallen during Q2 2025, now at their lowest since 2023. The average rate for £3,000 over three years was last as low in June 2023 (16.4%), for £5,000 it was last as low in December 2023 (11.0%), for £7,500 and £10,000 over five years, these were last as low in August 2023 (both 8.2%).


Credit card market analysis



Jun-23

Jun-24

Mar-25

May-25

Jun-25

Average purchase APR (includes fee)

31.2%

35.3%

35.4%

35.6%

35.7%

Average purchase rate per annum

25.359%

25.860%

26.209%

26.480%

26.537%

Average cash rate per annum

29.173%

29.441%

29.945%

29.892%

29.999%

Average interest-free purchase term (days)

249

264

267

282

286

Number of introductory interest-free purchase deals

67

58

62

62

64

Average interest-free balance transfer term (days)

553

522

529

530

536

Number of introductory interest-free balance transfer deals

73

60

65

66

67

Average balance transfer fee

2.26%

2.42%

2.47%

2.47%

2.50%

Data based on the start of the month.

Source: Moneyfacts Treasury Reports

Loan market analysis

Unsecured personal loan average rate (APR)

Jun-23

Jun-24

Mar-25

May-25

Jun-25

£3,000 over three years

16.4%

17.2%

16.8%

16.5%

16.4%

£5,000 over three years

9.4%

11.7%

11.1%

11.1%

11.0%

£7,500 over five years

7.2%

8.6%

8.4%

8.3%

8.3%

£10,000 over five years

7.2%

8.6%

8.3%

8.2%

8.2%

Average interest rates based as at the start of the month.

Source: Moneyfacts Treasury Reports





Rachel Springall, Finance Expert at Moneyfacts, said:



"Consumers who use their credit cards for everyday purchases will be disappointed to see borrowing costs rise to the highest point since records began almost two decades ago (June 2006). The average purchase APR, average purchase rate and average cash rates increased during Q2 2025, despite a cut to the Bank of England base rate in May. A combination of factors led to a hike, with Halifax and Bank of Scotland increasing their purchase and cash rates during the quarter, but new credit cards were also launched onto the market. One such deal from Zable is suited to consumers who have a limited credit history and find it difficult to acquire a typical credit card. Providers must continue to offer an array of options, such as for those who may only need to borrow small amounts sparingly, in hopes to improve or create their financial footprint. If borrowing options become scarce, it can result in consumers using more expensive forms of credit in desperation.



"Those who want to spread the cost of their purchases may find it encouraging that providers have improved their 0% purchase and balance transfer deals during Q2 2025, however, the cost to move debts rose, making it essential for borrowers to weigh up the upfront costs and lengthy interest-free terms. An introductory 0% offer will be particularly attractive to those struggling with the cost of living, as it encourages them to plan out repaying their debts without incurring interest each month. According to the Money Charity, supported by Vanquis Bank, the average credit card debt per household stands at £2,579, which could be cleared using a 0% balance transfer card in around two years if someone repaid just £115 every month, taking into account an upfront transfer fee of £64.

“Consolidating debts is essential for those struggling with multiple debts, particularly if they are accumulating a high rate of interest. An unsecured personal loan is a sensible choice for consumers to merge their debts into one place, and in positive news, loan rates have fallen over Q2 2025 to low levels last seen outside of this quarter in 2023. Those who plan to borrow a small sum of £3,000 this year will be pleased rates have plunged during Q2, compared to Q1 when rates escalated to a six-month high. Whether now is the right time to secure a deal or if a credit card would be a more flexible option will come down to someone's individual circumstances. Therefore, it's wise to seek support from a debt advice charity to get on the right path to pay off debts."

Between the start of March 2025 and the start of June 2025 (Q2 2025), the average purchase APR (which includes card fees) rose to 35.7% APR, now at a record high according to our electronic records which started almost two decades ago, in June 2006. The average purchase PA (per annum) rate rose to 26.537% over the same period, as did the average cash PA rate to 29.999%, both hitting their highest recorded levels.

The number of interest-free purchase offers rose to 64 during Q2 2025 and stands at its highest count in almost two years (65 - July 2023). Year-on-year there are more options. The average interest-free purchase term on credit cards rose to 286 days, up from 267 days in March 2025, with terms up year-on-year. The average term is at its highest level since October 2022 (300).

The number of interest-free balance transfer offers rose from 65 to 67 during Q2 2025, now at its highest count in almost two years (70 - July 2023). There are more options for borrowers to choose from than a year ago. The average interest-free balance transfer term on credit cards rose to 536 days, from 529 days in March 2025, with terms up year-on-year, now at its highest level since September 2023 (543).
Balance transfer fees rose to 2.50% during Q2 2025, also up from 2.42% a year ago. The average fee has sat above 2% since October 2022.

Average unsecured personal loan rates for £3,000 over three years, £5,000 over three years, £7,500 over five years and £10,000 over five years have fallen during Q2 2025, now at their lowest since 2023. The average rate for £3,000 over three years was last as low in June 2023 (16.4%), for £5,000 it was last as low in December 2023 (11.0%), for £7,500 and £10,000 over five years, these were last as low in August 2023 (both 8.2%).

Source - Moneyfactsgroup.co.uk