Zero-interest periods offered on credit cards expected to increase

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The interest-free periods being offered on credit cards are expected to get longer in early 2022, according to a survey of banks and building societies.

Long zero-interest periods could be useful for those trying to juggle their finances as households are squeezed by rising living costs.

Energy bills, food shopping and other expenses are expected to put household finances under strain in the months ahead.

The Bank of England asked lenders between November 22 and December 10 last year about their expectations for the period up to the end of February 2022.

The latest survey was carried out before the Bank announced a 0.15 percentage point increase to the base rate, taking it to 0.25%, in December.

Lenders said the length of interest-free periods on credit cards for both balance transfers and purchases is expected to increase.

They also expect demand for credit card borrowing to increase in the next few months, according to the Bank’s Credit Conditions Survey.

Recent research from found that improvements to introductory credit card offers mean people can get balance transfer deals lasting for 35 months and introductory purchase deals lasting as long as 24 months.

Rachel Springall, a finance expert at, said: “The amount of interest someone would pay on a typical loan of £3,000 on average would be more than £600.”

But she said that, as an alternative, using a Virgin Money balance transfer card, for example, could potentially cost £88.20 in a transfer fee and provide a borrower with 35 months to pay off the debt before interest starts to kicks in.

Ms Springall said: “If borrowers are struggling with their debts, then seeking help from a debt charity is wise and it’s always worth checking any credit score before applying for a card or loan too.”

He added: “Worryingly, many people aren’t aware that BNPL (buy now pay later) schemes are a form of credit.

“Lenders expect demand for loans to increase as consumers brace for the biggest squeeze for a decade, with energy bills alone expected to rise by up to 50% in spring, while fuel prices, (and) the bumper cost of groceries add further strain on household budgets.

“Those riddled with debts who are struggling to pay might be able to arrange an alternative. It is worth consulting a debt advice charity such as StepChange or Turn2Us and they will go through all of your options.”

Mortgage demand, meanwhile, is expected to decrease in early 2022, according to the Bank’s survey.

Last year saw a flurry of housing market activity as the stamp duty holiday prompted a rush of purchases before the deadline. Some of those purchases may have otherwise taken place this year.

The survey also found that business borrowing demand is expected to increase slightly among small firms early this year.

Demand for loans will be unchanged for both medium-sized and large businesses, lenders predicted.

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