This week saw further evidence that credit card companies are battling harder than ever to take advantage of what is currently a buoyant credit card market.
The surge in competition has ratcheted up a level in recent weeks, further evidenced by two new stand-out credit card offers.
Virgin Money launched a table topping limited offer of 37 months interest free on balance transfers as it seeks to grab a slice of the frenzied activity in this sector of the market. The deal comes with a one off balance transfer fee of 2.79%, but you’ll need to get your skates on if you’re interested as the card is only available until 30th September.
To put the size of the 0% switching market into perspective, there was just over 6 million balance transfers totalling more than £13.4 billion carried out in the 12 months to the end of July 2015. If each transfer was subject to an average balance transfer fee of 2.75% that’s £368 million straight into the coffers for the credit card lenders
The other new card launch that caught my attention this week was the ‘Everyday Plus’ card from MBNA.
It’s an impressive all round credit card for those who are looking for a long term piece of plastic for their wallet rather than constantly switching and ditching cards every few months.
Everyday Plus offers a competitive low rate of 7.4% APR, no fees for balance transfers, money transfers or cash withdrawals and no fees for using the card for transactions overseas.
The low rate makes it less of a financial burden if you decide to roll a balance over from time to time – for example a £2000 balance carried over for 1 month would cost £12.57 in interest charges compared with £32.10 on a card at a market average rate of 18.9%APR.
This card will prove stiff competition for the Halifax Clarity credit card which is also free to use overseas but earlier this year Halifax hiked the interest rate from 12.9% APR to 18.9% APR for new customers.
I’m sure there will be a reaction from rival companies to these latest best buys, particularly as consumers have rediscovered their appetite to borrow on plastic.
Increased confidence on the back of the UK economic recovery has seen the total sum outstanding on credit cards at the end of July rise to £41.36 billion (Source- BBA) up by £3.4 billion in the last 12 months and I’m sure it’ll continue to grow throughout the remainder of 2015.
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