Lloyds TSB launches low-interest credit cards range

LLOYDS TSB went on the offensive in the credit-card price war yesterday when it launched a range of cards with interest rates as low as 15.9 per cent APR, writes Andrew Verity.

The high street bank is abolishing annual fees on the new credit cards, called Asset, and charging a maximum interest rate of 18.9 per cent APR. Rates fall to 15.9 per cent on balances over pounds 1,000 and the cards carry benefits such as free warranties and travel insurance.

Lloyds TSB has seen its share of credit-card lending shrink from 17 to 15 per cent in the past three years as US competitors have lured customers away with lower rates.

The move undercuts Barclaycard, the traditional market leader, which has also lost market share to US competitors. The American competition - with rates as low as 11 or 12 per cent - includes MBNA, Capital One, Bank One, and a new entrant to the UK market, Providian.

Gerald Hawkins, managing director of card services at Lloyds TSB, said: "We are facing a situation where competition in the market has been explosive. The market is growing by over 20 per cent a year for three to four years."

Mark Austin, of RBS Advanta, criticised Lloyds TSB for leaving existing customers, who hold the Lloyds Bank Classic Reserve Card, stranded on a rate of 19.9 per cent - up to 4 points higher than the new rates.