Don't be led astray by 0% credit cards

Adverts and price comparison sites tempt you towards the longest zero per cent plastic on the market. Yet some consumers simply want a low-rate credit card with no introductory gimmicks

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The Independent Online

Consumers are missing out on excellent all-rounder credit cards thanks to comparison sites' blinkered focus on zero per cent deals.

The balance transfer segment of the credit card market continues to get the most coverage meaning that more suitable, long-term credit card deals are not being brought to the attention of consumers.

All the adverts and price comparison sites tempt you towards the longest zero per cent plastic on the market. Yet some consumers simply want a low-rate credit card with no introductory gimmicks – plastic they can they can stick with for years to come.

Cards such as the Lloyds Bank Platinum at 6.4 per cent APR, MBNA Low Rate card at 6.5 per cent, or Tesco Clubcard charging 7.8 per cent, could fit the bill. Interest-free plastic can cut your costs if used wisely, but there are solid multi-purpose cards that rarely get a mention.

You can easily get 36 months plus terms on free credit on balance transfers, but the longer the deal the higher the balance transfer fee – hitting almost 3 per cent in some cases. Another issue often overlooked in the rush for an interest-free deal is the "go to" rates when the introductory deal finishes. In some cases these are touching 20 per cent APR, far higher than the "all-rounder" cards mentioned below.

If you're disciplined enough to take advantage of the zero per cent period and then move on to another card and repeat the process it makes financial sense, but if you want to hang on to your card, go for one with a wider range of benefits and a better long-term rate.

Excellent all-round cards include the new MBNA Everyday Plus at 7.4 per cent APR with no charges for using abroad and the Nationwide Building Society Select at 15.9 per cent APR with 0.5 per cent cashback and commission-free purchases overseas (for Nationwide current account customers).

The Halifax Clarity credit card is worth a look too, though it's lost some of its shine since the interest rate rose from 12.9 per cent APR to 18.9 per cent this year.

Cut-throat mortgage battle is good news for borrowers

While savers are still scrapping around to find a half-decent return on their cash, mortgage customers have a vast array of ultra-low-rate home loans to choose from.

Lenders are keen to remain in the best-buy tables to meet year-end targets, hence the competitive rates across a range of LTVs. So, whether you've got a 35 per cent or a 10 per cent stake, banks and building societies are fighting hard to win your business.

For example, at 65 per cent loan to value, Virgin Money is offering a five-year fix at 2.37 per cent with a £995 product fee; for a shorter-term, 65 per cent LTV deal, Norwich and Peterborough Building Society is offering three years fixed at 1.88 per cent with a £195 fee.

If you're after a 90 per cent mortgage, Yorkshire Bank is topping the best buys with a two-year fixed rate of 2.39 per cent and a five-year fixed deal at 3.39 per cent, both with a £999 product fee.

If you're coming to the end of your current mortgage deal these rates are a fraction of what you'd pay on your lender's standard variable rate (SVR), so speak to an independent mortgage broker to find the best interest rate and fee combination for your circumstances.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

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