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27 February 2011
Is this the best credit card ever?
Yahoo!UK Finance, Daniel Milano, 15:30, 25 February 2011
With the age of austerity in full swing, lenders are fighting hard for your business.
In the past week we have seen lenders offering some of the best deals in recent years with three market-leading credit cards, loan rates dropping and extended 0% purchase deals.
As of this week the most attractive rate for a personal loan has dropped below the 7% barrier for the first time since July 2008 and 0% balance transfer deals have extended to 18 months — the longest they've ever been.
And that's great news for you, as the new deals could potentially save you hundreds of pounds in interest payments this year.
Balance transfer cards
Nationwide and Barclaycard have shaken up the credit card market this week with the launch of new market-leading products.
Barclaycard has yet again extended its balance transfer deal, this time to 18 months - the longest balance transfer deal ever.
Earlier this week Nationwide matched Barclaycard's 17 month 0% balance transfer offer by introducing a new credit card with 15.9% APR — a full point lower than Barclaycard.
However, Barclaycard hit back with a new market-leading offer giving new customers an additional month to avoid paying interest with a 2.9% fee. The card also offers three months of 0% on purchases with a 16.9% APR and allows you to use contactless payment terminals and earn rewards with the Barclaycard Freedom scheme.
Nationwide's offer is still a good deal with 0% on balance transfers for 17 months and 0% on purchases for three months. The card carries a 2.95% fee and transfers must be made within the first three months of taking out the line of credit.
If you shift your existing credit card debt onto one of these products you would have until late 2012 before the interest kicks in.
And that means you could save quite a lot of money in interest. If you have £3,000 of credit card debt and are making repayments of £200 a month at 19% APR, it would take 18 months to clear your debt and you would pay £410.82 in interest.
With Barclaycard however, you could clear you balance in 16 months for a fee of £87 — saving you £323.82.
Although both cards come with three months interest free on new purchases, you might be better off considering a 0% purchase deal if you plan to spend on the card.
Purchase cards
And it's not just people looking to transfer a balance that are benefitting. M&S money has introduced a new offer of 0% on all purchases with the M&S Credit Card for 15 months with a 15.9% APR. Shopping with the card could earn you points as well as cashback in the form of vouchers to use at M&S stores.
M&S Premium Club members enjoy triple loyalty points on the credit card for shopping as well as worldwide family travel insurance. However, there is a £15 annual charge for the privilege.
Prior to this, the Tesco Clubcard Credit Card had long been the market leader with a 13-month interest-free period on purchases and a 16.9% APR. The card also carries nine months interest-free on balance transfers.
In you are a Tesco shopper, you could earn 500 free Clubcard points if you apply before 3 March.
Bear in mind, it would be wise to ensure you have paid off your debt before the offer expires or you will start paying interest on your debt.
Loans
If you are have a good financial record and are looking to borrow there is good news. A number of lenders have dropped their rates since the beginning of the year which has ignited a rate war in the personal loans market.
This week Alliance & Leicester once again dropped its loan rates, this time to 7.1% from its market-leading 7.2% for loans between £7,500 and £14,999.
M&S Money hit back and launched the market's first sub 7% loan since June 2008. The 6.9% is the UK's lowest personal loan rate and is for loans up to five years between £7,500 and £15,000.
Bear in mind, the most competitive rates are only available to those with a very good credit rating.
