AS 2017 gets under way many Scots will still be suffering the after-effects of a lavish Christmas. Debt charities warn that January will be one of their busiest periods ever, with more than five million people expected to have debt problems following the festive period.

A number of new zero per cent balance transfer deal have been launched in recent weeks with record interest-free periods, meaning borrowers can take longer to repay what they owe without charges.

In reality, however, two thirds of credit card customers will fail to clear their debts before the interest-free window ends, with an APR of up to 21 per cent kicking in thereafter.

The longest zero per cent period currently on the market is offered by MBNA, lasting for 43 months and with an incentive of £20 cashback if £1,000 is transferred in within 60 days. The balance transfer fee is 3.29 per cent. Others, including Edinburgh-based Sainsbury’s Bank, Barclaycard and nuba are offering 42 months interest-free borrowing.

The amount being shunted on to zero per cent balance transfer cards has crept up in the last six years, from £820 million in January 2010 to £1.36 billion in January last year, according to statistics from the British Bankers Association. The number of people using these deals has also risen, from 412,000 to 588,000 over the same period.

At the same time, household debt has rebounded to levels not seen since the aftermath of the financial crash. Data released by the Bank of England this week showed that UK personal debt grew by 10.8 per cent to £192.2bn in the year to 30 November, taking it to its highest level since December 2008.

Andrew Hagger, founder of Moneycomms, said the figures could lead lenders to start tightening their lending criteria.

“With the total amount outstanding on credit cards up by £2.5bn in the last 12 months, and now at £63.1bn, you start to wonder how much longer this credit spree will last before lenders put the brakes on.”

For Peter Tutton, head of policy at StepChange Debt Charity, the figures mean that “alarm bells should [already] be ringing”.

“Previous experience shows how such increases in the levels of borrowing can leave households over-indebted and vulnerable to sudden changes in circumstances and drops in income that can pitch them into hardship,” he said.

The statistics come as the consumer debt industry has attracted an unlikely new entrant in the form of peer-to-peer (P2P) lender The Money Platform, which has been granted a banking licence by the Financial Conduct Authority to offer a more affordable alternative to payday lenders.

The website operates much like other traditional P2P lenders, connecting savers directly with borrowers and cutting out the middle man in order to save costs. However, The Money Platform only deals in short-term loans worth up to £1,000 and lasting between three and 12 weeks. The platform has had 1,255 applications but only approved 82 loans since launch. It may soon be followed by another P2P payday lender, Welendus, which is still awaiting regulatory approval.

However, as The Money Platform’s loans come with an APR of 165 per cent, meaning the total cost of borrowing £1,000 for four weeks would be £112, short-term overdrafts or credit cards could be a more cost-effective option for those looking for a payday-style loan.

Stuart Carmichael, chief executive of Glasgow-based Debt Support Trust, noted that Halifax, Bank of Scotland, NatWest and Royal Bank of Scotland all allow customers to borrow £1,000 for 30 days in an arranged overdraft at an APR of 19.89 per cent. The total cost of borrowing, including a £6 monthly fee, would therefore be £21.02.

He added that while credit cards with long interest-free periods are typically reserved for those with the best credit ratings, shorter periods could be more suitable for those looking for temporary debt.

“If it’s a short-term loan that’s required, an interest free credit card for one month would be the best option - borrow the £1,000, repay it after four weeks and pay no interest,” he said.

Even if the borrower could not repay in time, a typical APR of 18.9 per cent would still be cheaper than P2P lending.

Despite this, Charles Balcombe, co-founder of The Money Platform, said that some people still prefer to take out a loan with a fixed term rather than take on credit card debt that they may not pay off within the interest-free period.

“We believe that we are one of the most cost-effective, short-term loan options available in the UK,” he said. “Whilst credit cards can be cheaper, our research has found that many people prefer the ability to borrow a sum and repay it in full as quickly as possible, instead of constantly having credit card debt looming over them every month.”

Mr Carmichael agreed that anyone taking on credit card debt must have a repayment plan and know when their debt will be fully repaid.

“After Christmas and New Year, most people are cash-strapped and it's a financially challenging time, but borrowing more money can in fact make the situation worse for longer. If overdrafts and credit cards have been exhausted, it's time to seek debt help, not prolong financial difficulties,” he added.