UK Credit Card Market Back Open for Business

By: MoneyFacts

The credit card market has seen a resurgence in recent months as card providers once again put the ‘open for business’ sign in the window.

In the last year the number of cards charging no interest on new purchases for at least 10 months has increased by 450%.

In the same period, the number of cards offering 0% on balance transfers for at least 10 months has increased by 20%.

Number of cards offering 0% for 10 months or more:

Other providers have launched competitive reward schemes including American Express, Barclaycard, Egg, NatWest, Royal Bank of Scotland and Sainsbury’s Finance.

However, interest rates charged on cards continue to increase, with the average credit card rate today standing at 18.7% APR. Since the start of the year the following providers have increased rates for new customers:

• Barclaycard – rates increased by up to 2.0%
• Capital One Bank – rate increased by 5.0%
• Egg – rate increased by 1.0%
• MBNA Europe Bank – rate increased by 1.0%
• Sygma Bank – rate increased by 2.0%

Michelle Slade, spokesperson for Moneyfacts.co.uk commented:

“As the recession took hold credit card companies cut back on offering cards to new customers. While a few competitive deals were on offer, very few customers appeared to be able to successfully apply.

“Credit card companies have taken time to assess the market and now feel comfortable with doing business in the current economic environment.

“Competition has returned to the credit card market and card providers are actively trying to attract new business.

“Customers looking to make new purchases can find cards offering no interest for a year. Customers needing to repay existing debt can find deals charging no interest for 16 months.

“Most card providers currently make significant revenues from having a negative order of repayments, but following an OFT investigation card providers have until the end of the year to amend this.

“MBNA Europe Bank is the first provider to react to the announcement and joins just Nationwide BS, SAGA and The Co-operative Bank in offering a positive repayment order.

“Unfortunately for customers interest rates continue to rise and are only likely to increase further as providers are forced to lose revenue from moving to a positive repayment order.”

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