23rd June 2026
Moneyfacts UK Unsecured Lending Trends Treasury Report data reveals 0% introductory purchase and balance transfer terms are at a four-year high, yet credit card interest stands at a 20-year high. Loan pricing is stable, rates lower year-on-year.
0% balance transfer terms at highest length in around four years (September 2022 - 612 days). The average 0% balance transfer term on credit cards is now 605 days.
Balance transfer fees fall to lowest point in over 12 months (May 2025 - 2.47%).
0% purchase deals offer lengthiest terms in four years (June 2022 - 307 days). The average interest-free purchase term on credit cards is now 303 days.
Cost to borrow on credit cards at highest level in 20 years.
The average purchase APR (which includes card fees) has risen to a new record high of 36.0% APR (electronic records began two decades ago, in June 2006).
The average purchase PA (per annum) rate rose to a record high of 26.878%, as did the average cash PA rate to 30.544%.
One quick move to a 0% deal can help save borrowers £700 in interest charges and get debt-free faster.
Move from a card incurring interest charges to a fee-free 0% balance transfer deal and make fixed repayments, not the bare minimum.
Average unsecured personal loan rates are stable, yet the average rate on a £5,000 loan rose ever so slightly since the start of March 2026.
Rachel Springall, Finance Expert at Moneyfacts, said, "Competition has ignited on introductory interest-free card offers which could help defuse the glaring debt time bomb facing households. This is great news at a time when the average interest rate charged on credit cards is at a 20-year high.
The average length of a 0% balance transfer deal, of 605 days, is at a four-year high and the upfront cost to move debts to a balance transfer deal has dropped to 2.48%, its lowest cost in over a year. Those making large purchases and wanting a bit of breathing space may be delighted to see the average length on 0% purchase terms, now 303 days, is at its highest point in four years.
Credit cards are a great option for borrowers for everyday purchases or more, as any goods or services not received which are valued over £100 up to £30,000 are covered under section 75 of the Consumer Credit Act.”
Cardholders can avoid interest and fees on debts
“Credit card holders who do not have a 0% offer and only pay the bare minimum back each month will have the debt sitting overhead for much longer than they might realise. A £2,000 debt would take two years to pay off if someone repaid a fixed £115 every month if being charged 36.0% APR, costing almost £700 in interest.
However, those who move this to a 0% balance transfer card can clear it in just over 12 months by making £150 monthly payments. It is even possible to not pay any fees whatsoever, like a transfer fee or card administration fee, as right now there is a fee-free 13-month 0% balance transfer deal available from Barclaycard, a 12-month offer from Virgin Money and Santander, as well as 11 months with NatWest and RBS.
This is made more strikingly significant with recent data from UK Finance revealing that 48% of credit card debt incurred interest in March 2026, so whether big or small, it’s wise to prioritise paying off debts quickly.
“A credit card can be an incredibly useful method to cover unexpected costs or cover essential purchases in times of desperation. The safety net is ever greater for those who do not have sufficient savings to cover them in the event of illness or unemployment for a few months. A recent study by MetLife UK revealed how Gen Z mortgage holders are particularly exposed to income shocks, with half (50%) missing a mortgage payment due to injury or illness.
Missing payments is bad news for consumers looking to keep their credit score in good stead, and they will be looked upon less favourably when applying for a new card or loan. It is vital to get missed payments made within any given grace period if the initial due date is missed, usually around two weeks for a mortgage, and around a month for a credit card.”
Mixed picture on loan pricing in recent months, but rates lower year-on-year
“The past few months painted a mixed picture on unsecured personal loan pricing. While on the face of it, the £7,500 tier rate remained unchanged, there has been repricing activity beneath the surface. Clearly, pricing has been a delicate balance for lenders, considering their appetite to risk as cost of living pressures remain, alongside the need to entice new business.
Thankfully, year-on-year, loan rates are lower across the board, and the market appears to be relatively stable in spite of wider concerns over the economy. Those looking for smaller loans must shop around and never take the advertised rate as gospel; at the start of March, the average rate on a £5,000 loan over three years rose from 10.2% to 10.5% APR, the highest it’s been since the start of 2026 (10.6%).
Barclays Bank was one of the providers to increase rates, with its Barclayloan £5,000 tier up by a notable 4.3% for existing premier account customers, other increases were more modest, such as Santander and Novuna Personal Finance increasing by 0.6% and Tesco Bank up by 0.1%. On the flipside, NatWest and RBS cut by 0.3%, but remain priced higher than the lowest rate deal (9.6% APR vs 6.9% APR with M&S Bank).
“An unsecured personal loan is a great choice for consumers looking to consolidate their debts, or to fund the cost of other projects, like home improvements. According to The Money Charity, the total unsecured debt per UK adult is £4,504, and using a loan to consolidate this into one place could help borrowers by creating a fixed repayment plan.
Consumers are still struggling with debts, and a recent report from StepChange revealed a 21% rise in providing debt advice year-on-year. The most common concerns over debt exposure were a lack of control, cost of living increases and unemployment or redundancy.
The vast majority of clients had credit card debts (71%), and around half had loan debts (53%), while 60% revealed that they rent. Consumers who become exposed to unexpected shocks and fear their debts will spiral out of control must seek debt advice for support.”
Moneyfactsgroup.co.uk
Moneyfactsgroup.co.uk