The fall in the number of balance transfer deals, and in the length of 0% interest periods on credit card purchases, could cause havoc with customers' credit records, a credit card expert is warning.

Pierre Williams, head of research at  comparison site MoneyExpert.com, says: “There’s a real danger of a vicious circle here for borrowers reliant on 0% deals. As the lengths of deal are cut they’ll have to make more applications and risk more rejections, making their credit histories worse and limiting the chances they have of getting credit in the future.”

According to the website, credit card firms have slashed the number of 0% purchase deals by a fifth in the past year, while also cutting back on balance transfer deals.

Its research has found that as many as 31 cards offering 0% deals on spending have been withdrawn in the past year, as card firms bid to cut back on bad debts.

And borrowers who want to transfer debts to 0% deals are also under pressure, with the average balance transfer period cut to nine months from 10 months and the number of offers on the market reduced by 10%.

The cutbacks come against an increase in rates across the market, taking the average credit card rate to an all-time high of 18%, after an increase of 0.5% in the past 12 months, despite the Bank of England cutting the base rate by 4.5%.

Mr Williams said: “Card firms are battling against bad debts and desperately trying to boost profits, or in many cases cut their losses. Zero per cent spending deals are an obvious target, as are balance transfer offers.

“We’ve even seen the likes of Egg move to start charging customers a flat fee for using a credit card, and it’s certain that they won’t be the last to do so.”

In July 2008 165 credit cards offered introductory new purchase rates of 0%, but that number has since been cut to 134. Those coming to the end of their deals who haven’t cleared their balance will also be facing a sharp hike in their monthly repayments. The average APR on cards offering 0% deals, after the deal expires, has jumped from 17% to just below 18% in the past 12 months.

Failure to secure a 0% balance transfer deal will have immediate implications for the typical borrower. With the average balance transfer now worth £1,846, and the average APR at 18%, those missing out will have to pay interest across the year of just over £332, the equivalent of an additional £27.66 a month.

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