For the credit conscious: this season's card

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The Independent Online

The Post Office launched a combination credit card last week that, twice a year, lets users shunt big-ticket purchases off their card balance and into a cheaper "bolt-on" loan facility.

It means you can shift any purchase costing between £500 and £2,000 away from the card's typical annual percentage rate (APR) - currently 14.9 - to its lower rate of 6.8. However, you must pay this cheaper debt back within 12 months.

The Post Office's hybrid card has stolen a march on Barclaycard which, earlier this year, revealed that it was trying a very similar, and slightly cheaper, combi card. It has yet to bring it to the general market.

Hybrid cards could help their providers gain a distinctive advantage in the ferociously competitive UK credit-card market. But simply shifting a debt from one part of the same product to another at a lower rate could lead spenders into a "false comfort zone", warns Nick White of the price comparison service Uswitch.com.

This is because, having made their debt cheaper at the drop of a hat, people may feel less inclined to pay it off quickly.

Richard Mason from Moneysupermarket.com, another price comparison service, is not enamoured with the new card. "Consumers need to define their needs before taking out a combined product," he says. "The rates on the card - albeit competitive - are certainly not 'best-buy' quality."

The new Post Office card has a six-month, 0 per cent introductory deal on both purchases and balance transfers. Even so, Mr White points out that better deals do exist in both the credit-card and loan markets - including loan rates below 6 per cent - and that many other cards offer 0 per cent introductory rates for longer. "You might be better off keeping your debts separate," he says.

For those simply seeking a card for a balance transfer or for purchases, he recommends the Halifax One Visa. This offers 0 per cent interest on both for 12 months, albeit with a 2 per cent balance transfer fee.

Alternatively, Mr Mason picks out the Capital One card, which has a low, flat rate of 6.9 per cent, plus a 0 per cent balance transfer offer until January 2007.

Finally, Samantha Owens from financial analyst Moneyfacts points out that Moneyback Bank currently has a loan with interest set at 5.5 per cent.

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