Credit card interest free periods could hit 39 months by 2018

• If current trend continues, 0% balance transfer periods could reach 39 months by 2018, predicts Uswitch.com

• Interest-free periods would extend to 29 months by the end of 2014 and 32 months by end of 2015

• But new 12 month fee-free deal from Tesco could shake up the market and halt this trend.

New analysis from Uswitch.com, the independent price comparison and switching service, reveals that, if the current trend continues, by 2018 debt-laden consumers could have over three years to pay off the balance on their credit cards interest-free.

A study of credit card balance transfer periods over the last five years shows that the longest interest-free period has grown from 16 months in 2008 to 27 months in 2013. If interest-free periods were to increase at the same rate over the next five years, they could extend to 39 months by 2018.

0% balance transfer cards are a popular choice as they allow consumers to consolidate their debts into one place and provide breathing space without accumulating interest. However, they come at a price – the current deals that offer 27 months interest-free charge a fee of 2.98%. This would cost cash-strapped consumers £89 if they transferred a balance of £3,000.

However, this growth may not be sustainable, and the tipping point could be reached sooner rather than later. Earlier this month, Tesco launched a new credit card that waives the balance transfer fee, but with an interest-free period of just 12 months. If the rest of the market were to follow suit, the trend for lengthening balance transfer periods could be stopped in its tracks.

Michael Ossei, personal finance expert at** Uswitch.com says:** “Interest-free periods have become a game of one-upmanship over the last few years, with the major credit card providers all battling to get to the top of the table with the longest 0% period. If the bidding war continues at the same pace, by 2018 consumers would have over three years’ interest free bliss to pay back their debts.

“However, all good things must come to an end and the new offer from Tesco could well change the game. Offering a twelve month interest-free period with no balance transfer fee may take away a hurdle for those trying to break the cycle of debt, and those unable to pay off the full balance after a year could consider moving any remaining balance to a new card.

“The most important piece of advice for consumers is to think carefully about how long you really need to pay off your debts, instead of just going for the card at the top of the tables. If you choose a shorter interest-free period, not only could you have a better chance of being accepted for the card, but you’ll save some money on the balance transfer fee.”