Money Insider: Cashback offer may not be your best option

the clarity credit card from Halifax is recognised as one of the most attractive "plastic" deals on the market, and this week Halifax launched a promotion where new customers can earn 2 per cent cashback (maximum £60) for balances transferred to this card.

The Clarity product is popular because there are no charges for overseas transactions, cash withdrawals or balance transfer fees, plus all transactions are charged at a typical annual percentage rate (APR) which is a very competitive 12.9 per cent.

While the chance to pocket some cash for switching your balance from another card may look appealing, it may not be quite as good as it first appears, mainly because of the fact there is no introductory interest-free option for balance transfers. I've crunched some numbers just to highlight my point.

If you switched £3,000 to Halifax's card and paid off 5 per cent of the balance on each of your statements for 17 months, you would pay £385.59 in interest at 12.9 per cent. Once you have taken the £60 cashback into the equation your net outlay would be £325.59.

If you were to switch £3,000 to the Barclaycard Platinum credit card, you'd have to pay a 2.9 per cent one-off balance transfer fee of £87 (discounted to £67 up to 28 February) but no interest charges for the first 17 months.

If you're planning on switching an existing £3,000 card debt to Halifax Clarity with a view to clearing the balance in full within the first four months then it is still a viable option. However, if you intend taking more time to clear the balance, then a longer-term 0 per cent balance transfer card is a cheaper option.

ISAs: don't rush in

With a little over 50 days until we cross over into a new tax year, those people who haven't yet made a decision as to where to invest their tax-free cash need to start considering their options. With cash-based ISA savings products, the annual tax-free allowance is £5,100 per person for this tax year, with the 2011-12 increased cash allowance of £5,340 kicking in with effect from 6 April.

We are already starting to see a number of new and quite competitive cash ISA accounts starting to emerge but, with many of the major financial players still yet to reveal their hand, it may be worth hanging on for a few more weeks before making your final decision.

In the meantime, it is worth considering the choices out there and which may be best suited to you, but with a vast array of ISA product variations, you may find following checklist helpful.

* Is the interest rate variable or fixed?

* Does the ISA allow you to transfer in previous years ISA balances?

* Does the interest rate include a bonus? If so, make a diary note to switch when it expires.

* Is the interest on the account paid monthly or annually?

* Is the interest rate available only to existing customers?

* Do you have to purchase another financial product to qualify for this rate?

I will be following up with another look at the ISA market in the middle of next month. In the meantime, here is an idea of some of the best rates out there at the moment,

For an instant-access account with a variable interest rate, you can get 2.85 per cent from Santander or 2.80 per cent from Halifax,

A fixed-rate ISA currently pays 3.10 per cent for one year with Bank of Cyprus UK but you can get 4.30 per cent for a five-year fixed ISA bond from Northern Rock.

Changes to credit card minimum payments

mbna has announced that with effect from April 2011 all existing customers will see a change in the way their minimum monthly repayments are calculated.

In an attempt to cut the time taken to clear credit card borrowing, and to reduce the cost to MBNA customers, the minimum repayment will be set at 1 per cent of the principal balance plus interest and any fees or charges.

This minimum payment structure has been the norm for any new MBNA customers since the summer of 2009, and the lender is now making this consistent across all of it accounts by rolling it out to existing borrowers, too.

For those currently paying only the absolute minimum each month, this will mean having to make a slightly higher monthly repayment. For example, someone with a £2,500 balance at 16.9 per cent APR will have to pay about £20 more a month.

While ultra-low repayments on credit cards may seem attractive to those who are operating on very tight budgets, over the longer term the financial cost can be frightening, so any move to increase the minimum repayment is a welcome and sensible move, even though it may not seem that way to some customers initially.

Andrew Hagger is an analyst at

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

    The secret CIA Starbucks

    The coffee shop is deep inside the agency's forested Virginia compound
    Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

    How the Establishment closed ranks over fallout from Nessie 'sighting'

    The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
    One million Britons using food banks, according to Trussell Trust

    One million Britons using food banks

    Huge surge in number of families dependent on emergency food aid
    Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

    2,500 years of history in 3,000 amazing objects

    Excavation at Italian cafe to fix rising damp unearths trove
    The Hubble Space Telescope's amazing journey, 25 years on

    The Hubble Space Telescope's amazing journey 25 years on

    The space telescope was seen as a costly flop on its first release
    Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

    Did Lord Ashcroft quit the House of Lords to become a non-dom?

    A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
    Apple's ethnic emojis are being used to make racist comments on social media

    Ethnic emojis used in racist comments

    They were intended to promote harmony, but have achieved the opposite
    Sir Kenneth Branagh interview: 'My bones are in the theatre'

    Sir Kenneth Branagh: 'My bones are in the theatre'

    The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
    The sloth is now the face (and furry body) of three big advertising campaigns

    The sloth is the face of three ad campaigns

    Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
    How to run a restaurant: As two newbies discovered, there's more to it than good food

    How to run a restaurant

    As two newbies discovered, there's more to it than good food
    Record Store Day: Remembering an era when buying and selling discs were labours of love

    Record Store Day: The vinyl countdown

    For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
    Usher, Mary J Blige and to give free concert as part of the Global Poverty Project

    Mary J Blige and to give free concert

    The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
    10 best tote bags

    Accessorise with a stylish shopper this spring: 10 best tote bags

    We find carriers with room for all your essentials (and a bit more)
    Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

    Paul Scholes column

    I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
    Jessica Ennis-Hill: 'I just want to give it my best shot'

    Jessica Ennis-Hill: 'I just want to give it my best shot'

    The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...