Customers return to the card trick
Plastic is back in fashion. Alison Eadie looks at the options in a crow ded market
Saturday 04 February 1995
The past 12 months have seen an explosion of co-branded or affinity cards, says Liz Phillips, director of Credit Card Research Group. The GM Card from Vauxhall, launched in the UK a year ago, started the ball rolling. According to NOP, the GM card "has helped reverse a trend of rationalisation by consumers which began with the introduction of charges at the end of the 1980s".
The GM Card has been hailed as the fastest-growing credit card in the UK, with more than 500,000 cardholders already. For every £I00 spent, £5 goes towards the cost of a new Vauxhall. Some 10,000 Vauxhall cars and vans have already been bought using rebate points. Other attractions are a lower-than-average interest rate on unpaid purchases at 19.9 per cent APR and no annual fee.
The push by overseas banks into the UK market in recent months has expanded the choice. More than 20 banks, building societies and financial institutions are issuing credit cards. The GM Card is issued by HFC Bank, a subsidiary of Household Internationaland the fifth-largest issuer of Visa and MasterCard in the US.
MBNA International Bank and Beneficial Bank, both of the US, are pushing hard for new customers. Beneficial has signed up the British Medical Association, the Law Society and Manchester United Football Club. MBNA issues the Burberry Cards, where every £50 spent earns £1 against purchases in Burberry stores.
With such a choice, what should consumers look for? Much depends on whether the consumer is a prompt payer or a borrower. The trend towards paying off bills in full each month is rising. Some 50 per cent of cardholders pay in full each month and 75 per cent pay in full most months except at Christmas and holiday time, the CCRG says.
Prompt payers should look for perks and can ignore penal rates, but borrowers should go for the best financial deal.
The Robert Fleming/Save & Prosper card targets borrowers, with a 14.6 per cent APR on unpaid purchases, a £12 annual fee and 56 days' interest-free credit. Mark Austin, a marketing executive with Save & Prosper, says 80 per cent of cardholders take extended credit. He adds that some wily operators accumulate redeemable points on other credit cards and then transfer the outstanding balance to S&P to pay it off at a lower interest rate. "There is a hard core of price-sensitive people in this market," he said.
The Royal Bank of Scotland differentiates between the two types of customer. Its MasterCard is aimed at borrowers, with an APR of 16 per cent on balances below £l,000 and 14.5 per cent above £l,000. There is no annual fee, but also no interest-free period so interest starts clocking up from the date of purchase. Its Access and Visa cards are aimed at prompt payers, with an APR of 22 per cent, a £I0 annual fee and 56 days' interest-free credit.
For prompt payers the perks count more. Barclaycard has increased its lead over the past year and lays claim to 36 per cent of the market. A high-profile advertising campaign featuring Rowan Atkinson has helped to boost applications for new Barclaycards to a six-year high.
The permutations are endless. Bank of Scotland, the market leader in affinity cards, issues its MasterCard to more than 300 groups. Charities benefit by gaining 25p for every £I00 spent. But co-branding can go to strange lengths. BoS will soon be launching a Star Trek card for fans of the long-running television series.
Professional groups can get better deals, depending on their clout. The Law Society has teamed up with Beneficial Bank to gain advantageous rates. Solicitors earning more than £25,000 a year qualify for an APR of 17.5 per cent. Those earning less pay 18.9 per cent.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 iOS 8 apps and features: eight iPhone settings you need to look at after you install the update
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': TV reporter Charlo Greene quits live on air in spectacular fashion
- 4 Scotland could still declare independence – even without referendum, says Alex Salmond
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize