Barclaycard: A sensible credit card in a world of tarts!

Never use your balance transfer credit card for purchases - it's rule number one, right? Well, you know what they say about rules!

In a perfect world we’d all have 0% balance transfer credit cards locked away in the top drawer until we’re able to clear them. But unfortunately we don’t live in the perfect world, occasionally debts don’t get cleared and the flexible friend often comes out a little more regularly than we may like!

Yes, there is always the option of becoming a so-called ‘rate tart’ and shifting your debt between 0% cards each year to ensure you beat the bank. But some of us don’t want to spend so much time and effort dealing with our credit card debts – and anyway, what happens if you get turned down for credit when you’re mid-tart?

Well for those who are not so attracted to the life of a financial floozy but still want good value on both balance transfers and purchases, there is a way out. The aptly named Barclaycard Simplicity offers a 6.8% balance transfer rate with no fee, as well as an identical purchase rate so it can still come out of your wallet every now and again. But is the life of the low standard APR card really superior to that of the rate tart? Let’s take a closer look...

Balance transfers

The balance transfer card scene has become a little crowded of late – several cards now offer a 0% rates for 16 months. Don’t get me wrong, these cards are a good choice for some people, but you have to be sure that you can clear the balance before the APR jumps back up to the standard rate – often around 17%.

The alternative is obviously to switch to another 0% card, but what if there aren’t as many deals around when you want switch? Or you get declined? For those with large credit card balances you could be hit hard and fast by spiralling interest charges if you’re not able to tart in time.

Plus, bear in mind most 0% balance transfer cards will come with a handling fee – usually around 3%. Whilst this doesn’t sound like much, if you have a balance of £5,000, that's around £150 in fees.  Switch several times, and those fees really start to hurt!

By contrast, low APR cards are designed for borrowers who want a low rate (less than 7%) for a long time – no worrying about switching cards or APRs suddenly jumping. Plus, most do not charge a fee on balance transfers, so however much you shift across you won’t pay a penny for the privilege of doing it. Granted you’ll still be paying interest, but if you know it’s going to take you a few years to clear the balance, being a card tart may not be as wallet friendly as you think.

Purchases

When it comes to low rate cards, my favourite is the Barclaycard Simplicity. This card is the market-leading low APR card for balance transfers, which obviously puts it right at the top of the tables. But I like this card in particular because, while it is undoubtedly a sensible card to use for paying off debt, it also has an attractive side to it when it comes to purchases.

This is because, as well as all the other benefits of a low rate card, the Barclaycard Simplicity also has a 6.8% rate on purchases – ideal if you want to pay off your debts, but still need to buy on credit occasionally.

What's more, because this card also offers the lowest APR on purchases you can get, it is a good alternative to a loan.

Here’s a comparison of how the card squares up against the market leading rate (from Santander) for a £5,000 personal loan paid off over 4 years:

*I’ve used the market leading rate of 8.7% for new customers from Alliance and Leicester or Santander. Existing Tesco customers may be able to get an identical rate, head over to our loan centre for more information.

** Minimum monthly payment in the first month of £112.50 (2.25%).

As you can see, you’re saving yourself over £175 in charges by using the Simplicity card rather than the loan. I’ve included repayment details for debts cleared over 3 and a half years because, by using the credit card, you’ll have the option to vary the amount you repay each month. So, if you find yourself with some extra cash one month, you can cut the total amount of interest you’ll pay by clearing the balance quicker.

Do this with a loan and you're likely to be penalised with early repayment charges.

Related goal

Pay off credit card debts

How to destroy your credit card debt quickly and effectively.

Do this goal

Downsides

Firstly, while 6.8% is a market leading rate for a long term low APR card, it is variable. So you haven't got the security of a fixed rate that you have with a loan.

Having said that, credit card regulations mean that Barclaycard could not increase the rate within 12 months and even after that, there are ways to prevent them putting the rate up if they do decide to hike it up.

Secondly, like most credit cards, the Barclaycard Simplicity isn’t suitable for withdrawing cash. You’ll be hit with a 15.8% rate if you do, plus a 2.5% handling fee with a £2.50 minimum fee – ouch!

Finally, do take a good look at your credit report before applying for this card – it is a platinum card and if you haven’t got a great credit history your limit may not be as high as you want it to be.

But all in all, if you want a great value balance transfer card that you can still make purchases with, or a cheaper alternative to a loan without the need to tart yourself about every year, the Barclaycard Simplicity is definitely worth a look.

More: Easy ways to borrow thousands of pounds A credit card for lazy people