Two new long term low rate cards were launched this week from Lloyds Bank (Platinum) at 6.4% APR variable and The Co-operative Bank with 6.9% APR fixed for three years.
Andrew Hagger, personal finance analyst said: “If you’ve got a card in your wallet that charges a low standard interest rate, there’s less financial impact if you can’t repay your full statement balance.”
Hagger calculates that, if you have to carry over a balance of £1,000 to clear your Christmas spending then at 6.4% APR with Lloyds you can clear it in 3 months by paying £336.90 per month, including a total interest charge of just £10.70 whereas a card charging 18.9% APR would cost £31.67 and you’d need to pay back £343.89 per month.
With interest rates predicted to rise in the next year to 18 months experts feel the fixed rate option from Co-operative Bank gives cardholders the added peace of mind that their rate won’t budge until at least the end of 2017.
Hagger added: “ The Lloyds Bank card looks as if it has been strategically priced to top the low rate best buy table, just edging out MBNA at 6.6% APR and Sainsbury’s Bank and Co-op, both at 6.9% APR.”
“The crucial difference between the Lloyds Bank and MBNA card isn’t about the interest rate, but more around the added flexibility that the latter deal offers.”
“Where the MBNA card is unique is that you can transfer funds from the card to your bank account (via a Money Transfer) without a fee.”
“This enables customers to repay expensive personal loan and overdraft borrowing, both of which can charge APRs well into double figures.”
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