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

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

Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    The Last Word: For the good of the game: why on earth don’t we leave Fifa?

    Michael Calvin's Last Word

    For the good of the game: why on earth don’t we leave Fifa?
    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower