Choice of free balance transfer cards at record low

The findings from Moneyfacts.co.uk could spell higher costs for people in persistent debt - many of whom may be used to jumping from one 0% deal to another when their initial interest-free period ends.

Moneyfacts, whose credit card data goes back to 2006, said the number of balance transfer deals on the market which have an introductory zero-interest period has fallen to its lowest level, standing at 87 in September, down from 101 in June.

Interest-free balance transfers are a way to make the cost of debts cheaper. They allow people to move old debts to a new card, with 0% interest for a set period. This helps to keep the cost of the debt down, although any fees for transferring the balance need to be weighed up.

Borrowers should also aim to clear their balance before the 0% initial period ends - after which time the cost of the debt could rocket.

But doing this may become more difficult as Moneyfacts’ figures also show borrowers now typically face a shorter interest-free period on balance transfer deals before charges start to kick in.

As well as a dwindling choice of deals, the average length of initial interest-free periods has also fallen.

The average interest-free term is now 581 days, down from 632 days at the start of the year, Moneyfacts found.

The cost of making a balance transfer has risen sharply, with the average introductory fee hitting 2.2% this month, Moneyfacts said.

The findings come at a time when borrowing costs generally are on the up, with the Bank of England base rate having increased in August.