Rachel Springall, Finance Expert at Moneyfacts, said:
“Moving into 2026 it may be pleasing news for borrowers to know it’s more affordable to consolidate debts using an unsecured personal loan and that they have more breathing space with a 0% balance transfer card. The average rate on a £5,000 loan over three years is around 0.50% lower on average year-on-year, now 10.7% APR. 2025 has also been a fruitful year of activity among credit card providers. The market has seen a stark improvement to interest-free terms, now around 70 days longer on average than a year ago (December 2024 versus December 2025). This compares to a subdued year-on-year rise of just four days for the previous 12-month period (December 2023 versus December 2024). Borrowers will no doubt be yearning for more good news moving into 2026, and it is hoped that interest rates should fall further thanks to recent cuts to the Bank of England base rate. However, the pricing for unsecured lending is more in tune with the risk appetite of lenders, and interest-free deals can bend more to the seasonable demands of consumers.
“It is not all good news for borrowers, such as those who pick a balance transfer credit card that charges a transfer fee upfront. Over the past 12 months, the average balance transfer fee has risen from 2.44% to 2.51%, which means to move a debt of £3,000 would cost £75.30 right now, but some of the longest 0% transfer cards charge much more upfront. However, it is still beneficial to move debts that are incurring interest to a 0% offer, and to make fixed payments every month to clear the debt quickly. A recent study by UK Finance revealed that over the 12 months to September, 48.4% of credit card accounts incurred interest. According to the Money Charity, supported by Vanquis Bank, the average credit card debt per household stands at £2,660. This debt could be cleared by using a 0% balance transfer card in two years if someone repaid £115 every month, so it’s really worthwhile to review any repayments moving into 2026.
“It will be essential that new and existing borrowers take time to check their credit report before they apply for a credit card or loan, and make sure they have a steadfast repayment plan in place to become debt-free. Credit cards are an ideal safety net in emergencies, especially as borrowers can change to a minimum repayment, but those who need a stricter plan will find an unsecured personal loan an ideal choice in 2026 to consolidate debts.”
Rachel Springall, Finance Expert at Moneyfacts, said:
“Moving into 2026 it may be pleasing news for borrowers to know it’s more affordable to consolidate debts using an unsecured personal loan and that they have more breathing space with a 0% balance transfer card. The average rate on a £5,000 loan over three years is around 0.50% lower on average year-on-year, now 10.7% APR. 2025 has also been a fruitful year of activity among credit card providers. The market has seen a stark improvement to interest-free terms, now around 70 days longer on average than a year ago (December 2024 versus December 2025). This compares to a subdued year-on-year rise of just four days for the previous 12-month period (December 2023 versus December 2024). Borrowers will no doubt be yearning for more good news moving into 2026, and it is hoped that interest rates should fall further thanks to recent cuts to the Bank of England base rate. However, the pricing for unsecured lending is more in tune with the risk appetite of lenders, and interest-free deals can bend more to the seasonable demands of consumers.
“It is not all good news for borrowers, such as those who pick a balance transfer credit card that charges a transfer fee upfront. Over the past 12 months, the average balance transfer fee has risen from 2.44% to 2.51%, which means to move a debt of £3,000 would cost £75.30 right now, but some of the longest 0% transfer cards charge much more upfront. However, it is still beneficial to move debts that are incurring interest to a 0% offer, and to make fixed payments every month to clear the debt quickly. A recent study by UK Finance revealed that over the 12 months to September, 48.4% of credit card accounts incurred interest. According to the Money Charity, supported by Vanquis Bank, the average credit card debt per household stands at £2,660. This debt could be cleared by using a 0% balance transfer card in two years if someone repaid £115 every month, so it’s really worthwhile to review any repayments moving into 2026.
“It will be essential that new and existing borrowers take time to check their credit report before they apply for a credit card or loan, and make sure they have a steadfast repayment plan in place to become debt-free. Credit cards are an ideal safety net in emergencies, especially as borrowers can change to a minimum repayment, but those who need a stricter plan will find an unsecured personal loan an ideal choice in 2026 to consolidate debts.”
