More limited choice

As well as facing higher average rates, consumers also have fewer credit card providers and lenders to choose from.

“Since the start of December 2023, three credit card providers withdrew from the market; Wave, smile and Cashplus. As a result, the number of providers fell to 36, standing at its lowest point since August 2020 (36),” commented Rachel Springall, Finance Expert at Moneyfacts.

“The number of providers offering unsecured loans fell by four over the past quarter to 26, the lowest count since July 2012 (26), as AA, Bank of Ireland UK, Post Office Money and RateSetter left the market,” she added.

Furthermore, while the number of introductory interest-free purchase and balance transfer credit card deals increased slightly to 58 and 61 respectively between December and March, there are fewer options available compared to one year ago.

Longer interest-free terms

Despite the slightly higher cost of borrowing, there are some encouraging signs for credit card borrowers as the average length of interest-free terms on purchase and balance transfer credit cards increased between December and March.

The average interest-free term on purchase credit cards rose from 244 days in December to 255 days in March, which could be useful for those looking to spread the cost of a new purchase over several months.

Similarly, the average interest-free term on balance transfer credit cards increased from 508 days to 517 in the same period.