Money Insider: Credit card market: a tale of two borrower types

broadly speaking, credit card borrowers in the UK tend to fall into two distinct categories, based upon the way they've conducted their financial affairs.

For people with an excellent track record and blemish-free credit history there is a choice of interest-free balance transfer deals lasting up to a year and a half and an abundance of ways to earn cash back or reward points. If, on the other hand, you're struggling to keep your spiralling plastic habit in check and have exceeded your limit or missed a couple of payments along the way, then your choice of card is severely limited, best buy deals are out of bounds and the few options that may be available will be charging you upwards of 25 per cent APR.

If you fall into the former camp, the latest cards launched by MBNA during the last week provide fresh opportunities to benefit from extended interest-free credit or cash back.

The best-buy tables are brimming with deals to tempt creditworthy clients to switch allegiance from their existing flexible friends and the new 18-month 0 per cent balance transfer deal from MBNA is aiming to do exactly that.

For someone with a pristine credit record there is the opportunity to make your credit card work for you. For example, £2,500 transferred to the MBNA Balance Transfer card will cost just £72 for the one-off transfer fee (2.88 per cent), while if you borrowed that sum for 18 months at an average rate of 18 per cent APR, your interest bill would be more than £600.

If you've not got a balance to switch but are disciplined enough to repay your statement balance in full every month, then the new MBNA Visa Cashback card enables you to earn unlimited cashback at a market-leading rate of 1.25 per cent on your supermarket and fuel purchases and 0.5 per cent elsewhere.

A family spending £600 a month on the weekly shop and filling the car(s) will earn cashback of £108 over the course of a year – not a life-changing sum I know, but it takes no additional effort and it's money earned for making purchases that you'd be making anyway.

Lloyds TSB to team up with councils to boost first-time buyer lending

Lloyds TSB this week announced the launch of a new concept, entitled Local Lend a Hand, designed to help first-time buyers to purchase a home with a deposit of just 5 per cent. The initial pilot is being carried out in conjunction with local authorities in Blackpool, Warrington and Newcastle-under-Lyme, with a view to a full UK roll-out later this year.

Under the terms of the initiative, each local authority will agree which properties in their area will be available for first-time buyers under the new scheme. The first-time buyer will then be able to put down a minimum of 5 per cent of the property value and apply for a fixed rate Lloyds Local Lend a Hand mortgage for the remaining amount.

The local authority will provide extra security to the bank via an indemnity of up to 20 per cent of the property value, thus allowing the borrowers to benefit from interest rates far lower than they would normally experience for a 90 per cent plus LTV advance.

Unlike shared ownership schemes, the buyer will own the property in its entirety and the local authority for their part will receive interest on their 20 per cent stake, as well as having the opportunity to generate vital activity to support their local economy.

The number of new homes being built in this country is at its lowest level for decades, but with the Government recently allocating £950m to fund a new homes bonus initiative, perhaps joint ventures such as these with high-street lenders will enable councils to offer a ray of hope to those desperately seeking an affordable new home.

ISA frenzy as tax year deadline looms

Last week I reported that Barclays topped the ISA best buys with its new Golden ISA 3 with a rate of 3.25 per cent. However seven days on it's now quite a different picture.

Santander had originally priced its new Flexible ISA at 3.15 per cent, but has since upped the rate to 3.3 per cent to pip Barclays for the prime position.

However, the plan has since been scuppered by AA Savings with the launch of a new variable rate instant access ISA paying 3.35 per cent.

The level of consumer demand for high rate tax-free savings accounts was underlined this week when Skipton Building Society withdrew its 5 per cent fixed five-year deal after just 12 days, although it's not altogether surprising when you realise that the account was priced at a full 0.7 per cent above the next best deal from Northern Rock.

Andrew Hagger is an analyst at Moneynet.co.uk

Compare with the Independent: See how much you could save by switching credit cards. Compare now

Arts & Entertainment
Madonna in her music video for 'Like A Virgin'
music... and other misheard song lyrics
Extras
indybestFake it with 10 best self-tanners
Sport
Peter Moores was criticised for failing to handle top players when he last led the England team
sportFive years after being sacked from the job, Peter Moores to be named a cricket coach
News
Much of the colleges’ land is off-limits to locals in Cambridge, with tight security
educationAnd has the Cambridge I knew turned its back on me?
VIDEO
Sport
Steven Gerrard had to be talked into adopting a deeper role by his manager, Brendan Rodgers
sportThe city’s fight for justice after Hillsborough is embodied in Steven Gerrard, who's poised to lead his club to a remarkable triumph
News
The energy drink MosKa was banned for containing a heavy dose of the popular erectile dysfunction Levitra
news
Environment
People are buying increasing numbers of plants such as lavender to aid the insects
environmentGardeners rally round the endangered bumblebee
News
Ida Beate Loken has been living at the foot of a mountain since May
newsNorwegian gives up home comforts for a cave
Extras
indybest10 best gardening gloves
Sport
Australia's Dylan Tombides competes for the ball with Adal Matar of Kuwait during the AFC U-22 Championship Group C match in January
sportDylan Tombides was diagnosed with testicular cancer in 2011
Arts & Entertainment
tvIt might all be getting a bit much, but this is still the some of the finest TV ever made, says Grace Dent
News
Posted at the end of March, this tweeted photo was a week off the end of their Broadway shows
people
News
peopleStar to remain in hospital for up to 27 days to get over allergic reaction
Arts & Entertainment
The Honesty Policy is a group of anonymous Muslims who believe that the community needs a space to express itself without shame or judgement
music
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    1st Line Helpdesk Engineer Apprentice

    £150.00 per week: QA Apprenticeships: This company has been providing on site ...

    Telesales & Sales Support Apprentice

    £221.25 per week: QA Apprenticeships: This company is a well established Inter...

    Client Relationship Manager - SQL, Python

    £40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

    **Financial Services Tax**

    £35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

    Day In a Page

    How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

    How I brokered a peace deal with Robert Mugabe

    Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
    Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

    British Muslims's Happy video attacked as 'sinful'

    The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
    Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

    Michael Williams: Do as I do, not as I pray

    Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
    A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

    A History of the First World War in 100 moments

    A visit to the Front Line by the Prime Minister's wife
    Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

    Jenny Collier: 'Sexism on stand-up circuit should be extinct'

    The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
    Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

    Cannes Film Festival

    Ken Loach and Mike Leigh to fight it out for the Palme d'Or
    The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

    The concept album makes surprise top ten return

    Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
    Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

    Lichen is surprise new ingredient on fine-dining menus

    Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
    10 best baking books

    10 best baking books

    Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
    Jury still out on Manchester City boss Manuel Pellegrini

    Jury still out on Pellegrini

    Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
    Ben Stokes: 'Punching lockers isn't way forward'

    Ben Stokes: 'Punching lockers isn't way forward'

    The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
    Mark Johnston: First £1 million jackpot spurs him on

    Mark Johnston: First £1 million jackpot spurs him on

    The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
    Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

    Ricky Gervais: 'People are waiting for me to fail'

    As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
    Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

    Mad Men returns for a final fling

    The suits are still sharp, but Don Draper has lost his edge
    Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

    Google finds a lift into space will never get off the ground

    Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit