Barclaycard launches 18-month 0% credit card for less than perfect borrowers
The Barclaycard Platinum 18-Month Balance Transfer Credit Card is designed for those with a limited credit history.
Barclaycard has launched a new balance transfer credit card offering an 18-month 0% period, which comes with a handling fee of 2.9%.
But hold on. This isn’t the chart topping offer we’ve come to expect from Barclaycard in the balance transfer market!
Barclaycard has built up a bit of a reputation for bringing out the longest-lasting balance transfer credit cards over the past year or two.
The current market leading product is the Barclaycard 26-Month Platinum Visa which comes with more than two years interest-free on balances you transfer for a 3.5% fee. Read: The best 0% balance transfer credit cards for more.
So where does this new 18-month card fit in?
Different audience
The Barclaycard 18-Month balance Transfer Credit Card, unlike its other top of the range cards, is open to borrowers with a less than perfect credit score.
So the people likely to benefit from it are those that have been using credit builder credit cards to build or rebuild their credit profile.
It’s certainly a different audience for Barclaycard to promote balance transfers to.You don’t normally find providers rushing to take on balances interest-free from those with a limited credit history.
In fact, those trying to establish or rebuild a healthy credit rating don’t tend to get any perks at all.
Credit builder credit cards
Credit builder credit cards are no-frills tools used for establishing a credit profile or repairing an existing one that has been damaged, perhaps by the odd missed payment.
So it’s rare to see any rewards, cashback or interest-free offers on balance transfers or purchases tacked on.
After all the aim of the game is to prove you can handle a credit card by spending and then paying back your balance every month - not to get carried away with distractions which might encourage you to spend beyond your means.
But the tide seems to be changing.
The Barclaycard Platinum 18-Month Balance Transfer Visa gives you 18 months interest free on balance transfers for a fee of 2.9% as well as three months interest-free on purchases.
Barclaycard has also launched the Freedom 1, 2, 3 Points Visa, again for those with a limited credit history. It offers nine months interest-free on balance transfers for a 2.9% fee, as well as the chance to earn points for high street rewards.
The only other credit builder card I can think of that gives a reward to those grafting to build a better money background is the Capital One Classic Extra, which pays 0.5% cashback on all purchases and the chance to earn a £10 annual bonus when you pay your balance off each month.
Why does it make sense?
When I first heard about this card I was a bit sceptical. After all credit builder credit cards are designed to encourage good borrowing habits, which essentially boils down to paying off your balance each month and not overspending.
But then I wondered about what happens when it’s just not possible.
Despite your best intentions you can’t predict the future and unexpected costs might arise throwing you off course. The problem is with a credit builder credit card you’re penalised heavily for falling off the wagon.
Most credit builder cards on the market have an APR of around 34.9% but depending on your circumstances this could be even higher. So the outstanding balance you have on the card will start earning interest at what could be an alarming rate almost as soon as you make the wrong move.
You can continue to build your credit rating but slow down the pace of repayments with Barclaycard’s 18-month deal. It gives you nearly a year and a half to get your finances back in order and to hack away at the debt each month without worrying about interest building up.
However, you will want to carry over your good credit card habits if you go for the Barclaycard deal as it comes with a whopping 24.9% APR. So clearing your balance within 18 months is a must.
Tooling up
Balance transfer credit cards are usually only available to those with good credit histories and are a really useful tool to help manage your finances.
So I think rather than encouraging bad habits the new 18-month Barclaycard Platinum Visa could help those with limited or poor experience with credit to learn some new tricks and become more money savvy.
More on credit cards:
The best money transfer credit cards
The best cashback credit cards
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