press release

Press Release - 22/09/05

CREDIT CARD COMPANIES FEELING THE HEAT AS ‘RATE TART’ SWITCHING COSTING UP TO £3 BILLION A YEAR

Card holders benefit as plastic firms haemorrhage cash
Credit card firms will have to offer better deals to stay in the market, warns Moneynet

CREDIT CARD companies are losing around £2 - £3 billion a year through offering consumers zero per cent deals on balance transfers and purchases.

While so called ‘rate tarts’ have enjoyed the benefits of switching debt between credit card providers – at the expense of the plastic firms - Moneynet.co.uk, the online financial data comparison site, today said that UK credit card firms would have to deliver ever more competitive products if they wanted to retain customers.

“Recent research from Apacs and the BBA* shows that spending on credit cards is expected to rise by just 3 per cent over 2005 - down from last year's rate of 8 per cent – and Apacs has forecast zero growth by the end of 2006.

“The standard credit card is effectively an endangered species,” said Moneynet chief executive Richard Brown.

“Up until the end of last month, borrowing on credit cards has grown by just £0.8bn, compared with £3.8bn during the same period last year. But debit card use is currently going up at a rate of 20 per cent a year, and now accounts for two thirds of all spending on plastic,” said Brown.

“And there are new threats to the overall health of the credit card – Egg’s new Money Manager account, effectively a debit card with an overdraft facility where you earn interest on credit balances and pay interest when overdrawn – is likely to herald a new trend, with more flexible cards that will pay interest when in credit.”

“One thing is for sure, mainstream card firms will have to be less complacent in order to retain existing customers – and win new ones.”

“Competition in the credit card market is potentially excellent news for consumers, and with the likes of Egg shaking up the market with innovative new products, the longer term outlook for the canny borrower is good.

“But for the credit card company executives, the future might not be so rosy,” he added.

BEST VALUE INTRO RATE CREDIT CARDS

Provider	Card Name	Intro APR	Details	Typical APR	Annual Fee
Bank of Scotland	One Card	0%	0% on balance transfers & purchases for 12 months.	12.9%	Nil
Capital One	Platinum Mastercard	0%	0% on balance transfers until 01/01/2007 & on purchases for 3 months.	14.9%	Nil
Mint	Mastercard	0%	0% on balance transfers & purchases until 01/07/2006.	14.9%	Nil
Sainsbury’s Bank	Standard Visa	0%	0% on purchases for 10 months. 5.94% for life on balances transferred within first 6 months.	15.9%	Nil

BEST VALUE STANDARD RATE CREDIT CARDS

Provider	Card Name	Typical APR	Details	Interest Free Days	Annual Fee
Capital One	No Hassle Platinum	6.9%	On balance transfers & purchases.	54 days	Nil
Egg	Egg Money	6.9%	On balance transfers & purchases. 4% interest paid on any positive balance.	50 days	Nil
Halifax	Flat Rate Card	5.9%	On balance transfers & purchases.	Nil	Nil

CREDIT CARD BORROWING FACTS

93% repaid in a year

73% repaid in a month

17% borrowed at 0% interest

Source: APACS Review of 2004

PRESS ENQUIRIES

Richard Brown, Chief Executive, 0208 313 9030

David Andrews/Cathy Tully, David Andrews Media Ltd 07941 255855 / 01273 774109 / 07747196854

Consumer enquiries: info@moneynet.co.uk / www.moneynet.co.uk

Moneynet.co.uk is the UK's longest established online personal finance research and data analyst company. The company offers consumers a choice of thousands of low cost financial services products. From mortgages, personal loans to motor, home and medical insurance, credit cards, savings accounts and best buy fixed rate products, Moneynet is one of the most comprehensive online services of its kind in the UK. Founded by chief executive Richard Brown, the Moneynet brand is destined to become one of the UK's major players in consumer finance products.

A DAVID ANDREWS MEDIA LTD - RELEASE FEBRUARY 2005