The monthly rate on the card that bears a pounds 10 annual fee drops from 1.59 to 1.5 per cent from 1 March, bringing the annual percentage rate down to 21.3 per cent, or 22.4 per cent for cash advances.
This is the lowest rate from any major card issuer. But Save & Prosper's free card remains at 23.1 per cent APR. Barclays charges 22.9 per cent, Lloyds and Midland banks 23.1 per cent. The rate at National Westminster Bank drops on 1 March from 25.4 to 23.9 per cent. The Bank of Scotland also cut its rate yesterday, from 25.1 to 22.6 per cent.
Ian Lindsay, banking director at Save & Prosper, part of Robert Fleming, said S&P was the only leading card issuer that still offered an interest-free period to those who take credit on their cards.
'This is worth pounds 12 a year to the average cardholder spending pounds 1,500 a year - that's 3 per cent of the annual percentage rate, so S&P's effective interest rate is only 18.3 per cent compared with 22.9 per cent on Barclaycard.
'Anyone who does borrow habitually would be crazy not to switch to the fee-charging card,' Mr Lindsay said.
The break-even point where it is worth paying the annual fee is on borrowings of about pounds 350 a