Get a 0% period on purchases for three months with the Luma MasterCard.
There’s a new 0% credit card that almost anyone can get.
Luma has revamped its Luma Mastercard to add a three-month 0% period on purchases. Be warned though, once that 0% period comes to an end you’ll face a hefty representative APR of 35.9%, so make sure you can finish paying off your balance before then!
The card comes with a maximum credit limit of £1,500.
Who can get the card?
Luma targets its cards at borrowers with less-than-perfect credit histories. It says that you’re more likely to be accepted or a Luma card if you have some experience of managing credit, even if that means you’ve had CCJs or defaults in the past.
That said, you don’t stand a great chance of being accepted for if you’ve been declared bankrupt in the last 12 months.
Other than that, Luma says the main things it looks for are that the borrower is over 18 and is on the electoral roll.
0% credit builder cards
Luma isn’t actually the only firm offering a card with a 0% period to those with unappealing credit histories.
Barclaycard’s Initial Visa also has a three-month 0% period on purchases, after which you revert to a representative APR of 34.9%, ever so slightly smaller than Luma’s card. What’s more, that rate may be reduced over time – your account will be reviewed within 12 months and the interest rate will be cut if you always pay on time and keep within your credit limit of up to £1,200.
[SPOTLIGHT]Unlike the Luma card, the Initial is explicitly aimed at those with no credit history at all, as well as those with a less than perfect rating.
Is a 0% credit builder card a good idea?
I’ll confess, there is part of me that is a little uneasy at the idea of a 0% credit builder credit card. If you have a poor credit record, it suggests that you’ve made a mistake or two in the past with your borrowing.
Doesn’t a 0% period offer the temptation to get carried away, overspend and fall into even further trouble?
The answer is obviously yes. But as both Luma and Barclaycard’s Initial come with such small credit limits, the danger is at least limited.
Other bad credit options
There are a number of other credit cards aimed at borrowers with poor credit ratings worth a look.
If a low APR is your main concern, then the Aqua Classic 29.7% MasterCard, the Capital One 29.8% Classic Platinum and the Vanquis Bank Aquis (also with an APR of 29.8%) are your best options.
With the Aqua card you start with a credit limit of up to £1,600, though this can be raised after four months.
The Capital One card boasts a credit limit of up to £1,500, though again this is reviewed regularly with up to two optional credit limit increases per year.
And the Vanquis card starts with a credit limit of up to £1,000, which is reviewed (and potentially increased) every four months up to a true maximum of £3,000.
Also worth a mention is the Aqua Advance MasterCard. You start with an APR of 34.9% but pay on time and keep within your limit and this rate will be cut every couple of months until it falls to just 19.9%, not far off the interest rate of most mainstream credit cards.
For more, read Best credit cards if you have a bad credit history.
Improving your credit rating
If you don’t even know what your credit record looks like, you can get a free trial with CreditExpert thanks to lovemoney.com.
Making use of a credit builder credit card is just one way to improve your rating. Check out How to repair your credit rating in 2014 for more ideas.
More on borrowing:
The best 0% balance transfer credit cards
The best low-fee balance transfer credit cards