Zero-interest periods on credit cards expected to increase ahead of Christmas

Interest-free periods on credit cards being offered by lenders are expected to increase as Christmas approaches, according to a survey of banks and building societies.

The Bank of England’s Credit Conditions Survey said lenders reported that the length of interest-free periods on credit cards for balance transfers and for purchases had both increased in the past few months, and were expected to increase in the three months ahead.

However, defaults on credit cards were also expected to increase in the next few months.

The survey is carried out every quarter as part of the Bank’s role in maintaining financial stability and does not necessarily represent the views of the Bank of England itself.

The latest survey, for the third quarter of this year, was carried out in September.

Lenders were asked to report changes in the three months to the end of August, compared with the previous three months.

They were also asked for their expectations for the three months to the end of November, relative to the three months from June to August.

Lenders said that demand for mortgages from home buyers was unchanged in the past few months and was expected to be unchanged in the three months ahead.

Demand for re-mortgaging increased in the past few months and was expected to increase in the three months ahead.

The report also found that demand for corporate lending from small and big businesses slightly increased while demand from medium firms was unchanged in the past few months.

Demand for corporate lending in the next few months was expected to increase slightly for small, medium and large businesses.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders remain keen to lend and have the funds available to do so.

“The past few months has seen them easing affordability criteria, increasing the borrowing potential of many mortgage applicants.”

Karim Haji, global and UK head of financial services at KPMG said: ”With the recent energy price cap rise and inflation still elevated, lenders will be watching closely to ensure affordability pressures don’t translate into wider credit stress.”