The Financial Blog

Moneysupermarket.com say people should take more care when applying for a credit card, especially now that lenders have tightened their acceptance criteria…

Peter Harrison, credit card expert at moneysupermarket.com said: “It is imperative that people take care when applying for credit cards. Those that are too reckless in their applications may find their credit records fouled with a litany of failed attempts to secure credit. This in turn will only push them further down the food chain in terms of the products they will be accepted for. However, providers must also help us all out a bit, and give us a better idea as to how our suitability for products is judged.

“It is encouraging to see some providers making clear what is required for a successful application. At moneysupermarket.com we are always exploring ways to help people apply for the best deals they are likely to be accepted for, and with this in mind, we have a tool called SmartSearch which helps applicants sift through the many options to find the products they are most likely to be accepted for.”

For example, to obtain the Barclaycard Platinum Credit Card, one must:

• Have a good credit rating
• Have no history of bankruptcy
• Have not had any County Court Judgments (CCJs) or Individual Voluntary Arrangements (IVAs) registered against you in the past 5 years
• Have a history of managing credit commitments well i.e. have existing credit and at least 4 years of experience managing credit cards, loans, overdraft or mortgage
• Have always made payments on time
• Not already have a Barclaycard
• Have had a permanent UK address for 3 months or more
• Have a regular income of more than £20,000 pa
• Excluding a mortgage, have no more debt on credit cards or store cards than 10% of your income
• Be aged 21 or over

Just make sure you check ALL the details before applying, too many reckless applications could affect your credit rating.

Norwich and Peterborough Building Society have launched a new credit card offering 0 per cent on balance transfers for 12 months and 0 per cent on purchases for 3 months. Typical APR, variable, is 15.9 per cent…

Smart shoppers who like the security of paying for items by credit card will be able to capitalise on the year-long interest-free option, when they transfer the balance from another credit card. A 3% balance transfer fee will apply.

Customers who pay their balance in full and on time every month can enjoy up to 50 days’ interest-free on their credit card purchases.

Andrew Clare, N&P’s head of banking, said: “We are delighted to be joining forces with MBNA and I am pleased to be able to offer our customers such an attractive credit card offer.”

Greg Reed, president of MBNA UK Card, said: “MBNA is the market leader in affinity card marketing and N&P credit card cardholders will benefit from our experience in this market.”

Customers can apply for a new N&P credit card online, via the N&P website, in any one of the Society’s branches or by calling the N&P Contact Centre on 0845 300 2511. Whichever method they choose, customers can have an instant decision on their application.

This is a great offer but why would you bother applying through Norwich and Peterborough when you can get exactly the same deal through MBNA directly?? What’s in it for the consumer?

I’ve found a great post from www.TheThriftyShopper.co.uk about avoiding credit card rip-offs - Thrifty Shopper suggests trying a pre-paid card rather than credit cards - ultimately these cards are not forms of credit - you simply load money onto the card but you cannot run up debts.

If you are not careful and not in total control of your credit-card usage, you are probably throwing money down the drain. You could be paying massively over the odds or being charged enormous fees whilst being blissfully unaware. Spending the time to check your existing credit cards and researching the best credit card deals currently on the market could save you bundles.

 New Market leading Abbey Credit Card

Abbey have launched a market leading credit card offering 0 per cent on balance transfers for 15 months, 0 per cent on new purchases for 3 months and this Abbey credit card has a market leading low standard APR of 15.9 per cent, Typical.

This is good news for Brits with a credit card balance to transfer, the Abbey credit card beats the Virgin credit card because it’s Standard APR is 15.9 per cent compared to Virgin’s 16.9 per cent, standard APR. It must be said; apart from that these two credit cards are offering identical rates.

Abbey’s recent research shows that Brits are paying out over £9 billion in credit card interest every year!

• More than two-thirds of Britons have at least one credit card
• The average outstanding credit card debt in the UK currently stands at £3,256
• But less than a quarter of the nation’s total credit card debt (23 per cent) is currently on a 0 per cent deal

Callum Gibson, Head of Credit Cards at Abbey, comments: “By transferring an outstanding credit card balance to a 0 per cent deal, Britons could save an average of £443 a year, a huge cost saving in today’s difficult economic climate. At a time when people are having to manage their finances more carefully, transferring to a 0 per deal is a sensible way of ensuring your money goes further.

“The new Abbey Credit Card offers the longest balance transfer period on the high street to help customers more effectively manage their existing credit card debt. It also offers one of the best rates on ongoing purchases and spending.”

Features of the new Abbey Credit Card include:

• 0 per cent on balance transfers for 15 months (balance transfer fee of 3 per cent applies)
• 0 per cent on purchases for three months
• Highly competitive ongoing APR of 15.9 per cent

On Christmas Eve 2008 Barclaycard Payment Acceptance tracked a staggering 387 credit card and debit card payments every second. Talk about leaving it until the last minute!

The peak was expeirienced at 12.25pm Christmas Eve when the 387 card payments, per second(!), were processed for Barclaycard.

The worrying point for me is that transaction values increased by 4.4 per cent compared to 2007. This shows that people are still increasing their credit card spending, lets hope the credit card balances are cleared and people are not spending money they cannot afford to repay.

Commenting on the data, Antony Jenkins, Chief Executive of Barclaycard said: “Shoppers continued buying their Christmas presents right up to Christmas Day, with over eleven and a half million transactions on Christmas Eve alone. We have also seen a significant increase in post-Christmas shopping versus December 2007 as the sales have continued.”

Lloyds TSB leads Christmas ‘credit card website’ league table

Independent research from customer experience benchmarking company, Global Reviews, has found that in the run up to Christmas, the Lloyds TSB Credit Card website continues to be top of the ‘Credit Card Website’ league table.

Halifax (53%) and Barclaycard (54%) have made significant improvements to their websites, moving them into second and third place.  Both brands have leapfrogged HSBC (50%), moving it into fourth place, but Lloyds (65%) is still head and shoulders above the rest. Capital One scored 49% and MBNA 43%.
Global Reviews’ ‘Comparing the Credit Card Sites’ benchmark objectively measured customers’ experience on six leading credit card websites.  The sites were assessed against more than 680 objective criteria including the information available to prospective buyers, customer support, application forms, service
offered to customers, and general site usability. The study found that:

Halifax and HSBC offer the best site navigation with scores of 74% and 71% respectively.
Barclaycard offer the best experience for prospective customers with a score of 71% for this category.

Lloyds TSB offers the best customer support online with a score of 80%. This is the category with the greatest variance. Halifax and HSBC scored below 40%.   Application is the area where most sites could be improved. Lloyds TSB leads the field again with a score of 55% for its online application. The industry average was just 41% for this category.

Global Reviews director, Bertie Stevenson said: “The vast majority of consumers depend on websites to research their options. Credit card companies are missing a trick if they do not provide their customers with the best possible online experience.”

This is all great news for consumers but ultimately for me its the best credit card interest rates and balance transfer offers that really matter at the moment. IT’s all very well credit card companies providing better web sites with friendlier looking graphics and shorter application forms but all I’m really interested in the the credit card interest rate and the balance transfer rate and duration.

Just check out a few comparison websites like www.Moneyextra.com to see what credit cards are on offer today…

7.55 million Brits favour credit card over cash for everyday purchases - New research from Sainsbury’s Credit Cards has identified a breed of “everyday credit card users” who use their credit cards, as they would a debit card or cash, for everyday inexpensive purchases of £20 or less, and who clear their balances every month.

 The bank’s findings indicate that there are some 7.55 million of these everyday credit card users who spend a total of £3.64 billion on their cards every month.

One in two (48%) of all credit card holders don’t earn any rewards from expenditure on their cards. The Sainsbury’s credit card offers Nectar points equivalent to 2% cash back on Sainsbury’s purchases

With as many as 12 million (48%) of all credit card holders not earning any rewards from expenditure on their cards(2), the bank estimates that there could be as much as £1.76 billion worth of spend by everyday credit card users that is going unrewarded each month.

The average monthly spend figure for a typical “everyday” credit card user is £483, but some 1.41 million “everyday” card users regularly put £750 or more of their overall monthly expenditure on their credit card.

Donald MacLeod, Head of Cards at Sainsbury’s said:  “Although we’d never advocate people using their credit cards for everyday inexpensive purchases if they are likely to incur interest, we’ve identified a number of people who clearly like to use their credit card in the same way as they would cash or debit cards and who pay off their balances each month.  A card like our own that rewards them for every purchase they make is therefore perfect.

“Unfortunately, recent research reveals that one in two credit card users do not see any financial benefit as their cards don’t offer any financial rewards. In truth, there are fewer credit cards offering any form of financial reward linked to the amount of money spent on the card today, compared with four years ago, meaning there’s no better time to switch to a card that gives you something back.”

About the Sainsbury’s credit card rewards:

4 Nectar points awarded for every £1 spent on the card at Sainsbury’s - equivalent to 2% cash-back
2 points for every £10 spent elsewhere on the card - equivalent to 0.1% cash back
There is no limit to the amount of points customers can earn
Points can be redeemed against thousands of Nectar offers by simply visiting www.nectar.com
A regular booklet offering discounts worth around £60 p.a. on a range of products available at Sainsbury’s stores 
Regular exclusive wine offers

There is no doubt that any reward credit card makes more sense for customers than just the benfit of having the credit in the first place. One thing I’d say, however, is that there are better cash reward credit cards available, like the American Express Rewards card which, I think, offers up to 4 per cent cash back in the first 3 months (don’t take my word for it - check out the Amercian Express web site).

However - If you do your weekly or monthly food shopping at Sainsburys then a deal like this might be a good one for you to consider. Until recently I collected Nectar reward points and I found them especially useful or should I say more valuable for me making purchases in Argos. I don’t think I paid a penny for a microwave oven and iron I bought using Nectar points. But then again that would have been Nectar points I collected on ALL food and petrol shopping at Sainsburys for the best part of the last 3 years! So don’t hold your breath if you think it will turn into hard cash in your pocket that quickly!

According to the marketing analyst company Datamonitor, credit card spending is set to fall by 1.1 per cent during 2008.

This news should come as no surprise to most people struggling with the credit crunch and the worst UK economy for decades. People are now choosing not to spend on credit cards but use money they actually have in their accounts - so debit card spending is set to jump 14 per cent to £438 billion.

Credit card spending will work out at around £120 billion.

The good news is Brits seem to finally understand the effects of overspending and running up debts they cannot afford to repay.

People are now spending less on big ticket items and it would seem more reluctant to splash this type of impulse purchase on their credit card…

Barclaycard are one of the first credit card companies to have cut balance transfer fees from 3 per cent to 2.5 per cent on it’s OnePulse credit card. This signals what industry experts are predicting as the beginning of a series of fee cuts in a bid to attract new credit card customers.

With rival credit card companies always looking to attract more new customers the balance transfer fee looks set to be the next area of focus for attracting new business…

Virgin and Barclaycard both offer 0% on balance transfers for 15 and 14 months respectively and something like 75% of the credit card market offers a 0% deal with balance transfers.

Over the last 18 months the average balance transfer fee has risen from around 1.7 per cent to 2.4 per cent and most credit card issuers charge from 2.5 to 3 per cent on long term balance transfer deals.

So if you can hold out for a few more months and perhaps pay the interest on your credit card balance for one or two months you could end up with a smaller balance transfer fee to pay in a few months time.

There is some good financial news today! Following on from my post Fuel Price Drop - Asda and Tesco announced they’re cutting back prices on thousands of products in a bid to attract more customers, which is great news if you ask me.

The increasing UK inflation figures are putting emense strain on household finances across the UK and this is good news if you shop at either Asda or Tesco. If you dont then maybe you should consider it?

Tesco say they’re aiming to become britain’s biggest discounter by adding 350 new discount products to it’s own brand label; Richard Brasher, Commercial Director for Tesco said; “This is discount shopping with all the added quality and service customers want and have come to expect from Tesco.”

Asda say they’re cutting 5,000 prices, Chief Executive Andy Bond said; “For the past 11 years we have been voted the UK’s lowest priced supermarket. I’m determined that ASDA continues to win this coveted award which underlines our commitment to always offering our 17 million customers everyday low prices.”