Demand for credit cards at record high.
Demand for credit cards has never been higher, according to a new report from the Bank of England.
In its latest credit conditions survey, the Bank of England revealed that demand for credit cards increased “significantly” in the final three months of 2014. Indeed, the demand reported by the nation’s lenders was actually the highest it has been since the Bank of England started surveying banks and building societies back in 2007.
And those lenders expect demand to increase still further in the first three months of 2015.
Why we want more credit cards
The lenders surveyed by the Bank of England picked out a couple of key factors behind this big jump in credit card demand.
For starters, they identified that marketing campaigns had proved particularly successful, though this was also backed up by improving products.
That’s certainly true. In the last couple of weeks alone we’ve seen new longest-ever 0% deals on balance transfer and purchase credit cards, as well as the launch of the best ever fee-free 0% balance transfer credit card in the shape of the Santander 15-month card. Borrowers have never had such a strong set of products to choose from before.
The other big factor here is that access to credit has improved. According to the report, credit scoring criteria loosened and as a result the proportion of applications being approved increased. Perhaps unsurprisingly, as a result, lenders reported a “significant decline” in the credit quality of new credit card lending.
The best cards
With lenders more open to approving borrowers, and a succession of great cards launched, it’s clearly a pretty good time to be on the hunt for a credit card.
So which should you go for?
The best balance transfer credit cards
Balance transfer credit cards offer you a period of 0% interest on your balance. All you have to do is pay a transfer fee to move the existing debt onto the new card.
Over the Christmas period Barclaycard revamped its offering, taking its longest 0% offer to a record-breaking 35 months. That’s nearly three years in which to pay off your debt, without spending a penny on interest.
|
Credit card |
0% period on balance transfers |
Balance transfer fee |
Cost of transferring £2,000 balance |
Representative APR |
|
35 months |
2.49% |
£49.80 |
18.9% |
|
|
34 months |
2.39% |
£47.80 |
18.9% |
|
|
34 months |
2.80% |
£56 |
18.9% |
|
|
34 months |
3% |
£60 |
18.9% |
|
|
Bank of Scotland Platinum 34-Month Balance Transfer MasterCard |
34 months |
3% |
£60 |
18.9% |
|
HSBC Credit Card |
34 months |
3.3% |
£66 |
18.9% |
|
33 months |
2.79% |
£55.80 |
18.9% |
|
|
33 months |
2.89% |
£57.80 |
18.9% |
|
|
33 months |
2.9% |
£58 |
18.9% |
If you don’t need such a lengthy period in which to pay off your debts, you may be better off going for a card with a shorter 0% period but also a smaller transfer fee. In fact, there are now a number of cards that don’t charge a transfer fee at all.
The longest is the 123 credit card from Santander, which offers 23 months free of interest on any sums you transfer. However, there is a £24 annual fee (though it’s waived in the first year if you have a 123 current account) to consider.
Perhaps a better option is the Santander credit card, which offers 15 months free of interest without a fee to pay. Here’s how the various low-fee cards shape up.
|
Credit card |
0% period on balance transfers |
Balance transfer fee |
Fee paid on £2,000 transfer |
Representative APR after 0% period ends |
|
23 months |
None |
£0 |
16.5% |
|
|
15 months |
None |
£0 |
18.9% |
|
|
13 months |
None |
£0 |
18.9% |
|
|
12 months |
None |
£0 |
18.9% |
|
|
15 months |
0.25% |
£5 |
15.9% |
|
|
15 months |
0.35% |
£7 |
17.9% |
|
|
Post Office Platinum Credit Card |
18 months |
0.79% |
£15.80 |
17.8% |
|
19 months |
1% |
£20 |
18.9% |
|
|
24 months |
1.25% |
£25 |
18.9% |
*£24 annual fee
**Nationwide current account customers only
Get rewarded for your spending
[SPOTLIGHT]Of course, there’s more to credit cards than just 0% deals. If you are the type of person that pays their credit card bill off in full every month, you could get make use of reward credit cards.
These give you something back every time you spend, whether that’s cashback, air miles or loyalty points.
For more read The best cashback credit cards and The best reward credit cards.
More on banking and borrowing:
The best 0% balance transfer credit cards
The best 0% purchase credit cards