Sick of gimmicks? Try a low-rate credit card instead

Mar 31, 2014   //   by Keith McDonald   //   Credit Cards  //  Comments Off on Sick of gimmicks? Try a low-rate credit card instead

NatWest Branch

It’s been hard to miss the glitzy balance transfer offers that have dominated the credit card market in recent months. But not everybody believes this is the way forward for credit card customers.

Consumers can currently receive up to 31 months at 0% on a balance transfer (Barclaycard), and up to 18 months at 0% on purchases (Tesco).

But cards of this nature tend to require a flawless credit rating, and not all applicants will receive the maximum offer.

Providers also charge a fee of around 3% for transferring a balance, which helps to compensate for the loss of interest during the 0% period.

In this scenario, a customer transferring a balance of £3,000 would face a fee of £90 in addition to their existing balances.

And because most cards with long balance transfer offers only have short periods at 0% on purchases (typically 3-6 months), customers can easily begin to accumulate interest at a much higher rate if they spend on this type of card.

So, perhaps its time to consider what other options are available.

NatWest’s Low-Rate Card

NatWest Clear Rate PlatinumRBS / NatWest recently scrapped introductory offers across its savings accounts and credit card range, stating that the underhand measures often employed to make these products affordable to banks were unfair to customers.

Instead, the bank has returned its focus to simple and easier-to-understand products. The Clear Rate Platinum credit card is a clear demonstration of this new ethos in action.

The low-rate card charges from just 6.9% (variable) for both balance transfers and purchases, with a representative fee of just 11.1% (variable), based on an assumed credit limit of £1,200. Some customers will be offered a rate of 9.9% p.a. or 14.9% p.a. (variable), depending on circumstances.

Low-rate cards tend to benefit those who carry a balance and/or those who wish to spend on their cards at a more affordable rate of interest.

NatWest’s Clear Rate Platinum card does not promise customers two years or more to pay off existing balances without interest. But it does represent a cost-saving option in other ways.

Instead of a transfer fee, for example, which can easily exceed £100 for those who have larger balances, customers will face a single annual fee of £24.

Additionally, the steady rate of 6.9% (variable) offered by the Clear Rate Platinum is almost a third of the average credit card rate, which has risen to 18.5% in recent years.

This makes the Clear Rate Platinum card a good option for spending and servicing debt at an affordable rate – though a customer’s credit limit will be determined by their credit assessment.

A customer currently sitting on a balance of £1,000 at the average credit card rate could save around £79 by switching to the Clear Platinum Card.

Potential customers can use the bank’s quick calculator to get an idea of how much they could save in interest and fees compared to their existing card.

NatWest’s Clear Rate Platinum

A simple, low rate for balance transfers and purchases – 6.9% p.a. (variable). Just one annual fee of £24.

Representative 11.1% APR (variable) based on an assumed credit limit of £1,200. Standard interest rate for purchases: 6.9% p.a. (variable). Annual fee: £24. Your actual credit limit will depend on their credit assessment of you. The actual APR you’ll receive will depend on your circumstances.

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