Money Insider: Seek out heroes not zeros for a better credit card deal


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The Independent Online

Obsession with long-term, 0 per cent balance-transfer deals means that many decent, all-round credit cards get overlooked.

The balance-transfer segment of the credit-card market continues to get the most high-profile coverage and dominates the best buys.

Unfortunately, this often means that more suitable, good-value, long-term alternatives are being overlooked by consumers.

If you're looking for a new credit card, all the adverts and price-comparison best buys will do their best to point you towards the longest 0 per cent deals on the market.

This behaviour appears to be driven more by lucrative commercial arrangements on offer from the card providers. There seems to be little appetite from money websites to promote a wider range of card products suitable for those who are not in the market for a 0 per cent deal.

While interest-free plastic can save you a small fortune in interest costs if used wisely, there are also some very solid all -round credit cards on the market that rarely get a mention due to the blinkered and obsessive focus on the 0 per cent balance-transfer sector.

You can easily get 27 to 28 months plus terms on free credit on balance transfers, but the longer the deal the higher the balance transfer fee – now hitting 3.5 per cent in some cases. Another issue often overlooked in the rush to sign up for an interest-free deal is the "go to" rates when the introductory deal finishes. In some cases these are approaching 20 per cent APR, far higher than some of the "all-rounder'" cards mentioned below.

If you're the sort of person who takes advantage of the 0 per cent period and then moves on to another card and repeats the process then that makes financial sense, but if you want a card for the longer term there are some alternative options with a wider range of attributes and benefits and a much-lower interest rate.

The cards from Halifax Clarity (12.9 per cent APR), MBNA Everyday (13.9 per cent APR) and Nationwide BS Select (15.9 per cent APR) won't appear at the top of the best buys, but when you weigh up the sum of the component parts, these offer a range of different attributes and excellent value.

Their long-term interest rates are well below the market average of 18 per cent APR and also have additional benefits you won't find on a specialist 0 per cent card, but if you were to rely on the information in many of the best-buy tables, you wouldn't even realise these value-added cards existed.

Peer-to-peer returns speak for themselves

Data released this week by peer-to-peer (P2P) finance website highlights the gulf in value between "lending" and "saving" over the three years since the company launched.

The figures, compiled to mark its anniversary, show that someone lending £10,000 via the RateSetter Monthly Access would have earned 72 per cent more in interest (£440) than someone saving via NS&I One Year Bonds over the same period.

Rhydian Lewis, RateSetter founder and chief executive said: "The last three years have seen a quiet revolution in the world of personal finance, driven by an understanding that traditional savings products are no longer competitive".

It seems that lending has become the new saving, with increasing numbers of consumers signing up to P2P in search of better returns.

Leading P2P providers RateSetter and Zopa are continuing to win new business not simply due to their competitive rates but also by managing the entire process in a safe and transparent manner.

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