The festive season typically sees a surge in demand for interest-free credit cards to cover the seasonal splurge. However, new research suggests they are worse value than before and experts warn consumers should beware treating them as an easy option.

A typical UK household spends just over £2,500 in a normal month but that jumps to £3,240 in December, as we spend an extra £740 over the festive period, Bank of England figures show.

The cost-of-living crisis is taking its toll as one in three will turn to credit and finance to cover the expense as the cost-of-living crisis drags on, according to a separate study by John Lewis.

Taking out a credit card that charges zero interest on new purchases for a lengthy introductory period is tempting and can work out nicely for those who handle them carefully. However, they are also risky as borrowers will find themselves paying punitive double-digit APRs on any unpaid balance the moment it ends.

James Daley, managing director of consumer group and ratings provider Fairer Finance, warned that zero-interest purchase credit cards are less competitive than just one year ago, too. "Interest free periods have been falling while APRs are rising, too.”

Before the pandemic cost-of-living crisis, it was possible to find interest-free introductory rates stretching to 30 or even 36 months. Last Christmas, seven credit cards still charged zero interest on purchases for at least 20 months, with NatWest, RBS, Ulster Bank and Barclaycard stretching to 24 months, Daley said. “Today, just one card offers more than 20 months.”

The Barclaycard Platinum All-Rounder Visa’s introductory rates now offers the UK’s longest running initial purchases deal at 21 months.

At that end of that, the APR increases to 24.9 percent.

Others charge zero interest for 18 months, notably M&S Bank Credit Card Shopping Plus, HSBC Purchase Plus Credit Card Visa and the MBNA 0% Transfer and Purchase Credit Card Mastercard, Moneyfacts figures show.

Of these, HSBC and MBNA have follow-on charges of 24.9 percent, while M&S charges 23.9 percent. While these rates are standard, they'll come as a huge shock for those who have to pay them.

The average interest-free credit card deal now lasts for a much shorter term of just six months, Daley said, and many have a sting in the tail as standard APRs have been creeping up.

“The average in December 2022 was 22.9 percent but borrowers pay 24.4 percent today, while some rates can be as high as 34.9 percent.”

That will come as a shock for people who do not clear their bill by the time the introductory rate ends. Suddenly paying huge rates of interest will worsen any money problems they had before.

When taking out a new zero-interest rate, it's worth checking what you'll pay when it expires.

Daley said credit card companies may soon face fresh scrutiny by City watchdog the Financial Conduct Authority, as they are now obliged to prove they are offering fair value to customers under its new Consumer Duty rules.

Borrowers who play the game and regularly move their balances from offer to offer can get excellent value for money. “Yet credit cards are a very expensive way to borrow if you’re not benefiting from a promotional rate."

Daley added: "The grim truth is that more vulnerable customers often contribute the greatest amount to card company profits.”

READ MORE: Top cashback cards for Christmas spending this week to 'take advantage' of sales

For those struggling to pay their credit card bill, Andrew Hagger, consumer finance expert at MoneyComms.co.uk, suggested transferring the debt to a card charging zero interest on balance transfers.

Balance transfer introductory rates last longer, with the Barclaycard Platinum 29 Month Balance Transfer Visa stretching to 29 months, while the M&S Credit Card Transfer Plus offer runs to 28 months.

Switchers typically have to pay a balance transfer fee of between 2 percent and 3.5 percent, which would cost up to £105 on a £3,000 debt, but this may be worth paying.

Theoretically, borrowers could keep switching their balance from one card to another but Hagger warned: “Do not use them to avoid facing up to any credit problems. At some point, you have to clear that debt.”

Nobody wants to approach next Christmas still paying off this one, so approach all forms of credit with caution.