Jane Baker takes an in-depth look at the top credit cards and current accounts which have earned five stars in the latest independent review of deals by Defaqto.
If you regularly visit us here at lovemoney.com you'll probably know which products get a resounding thumbs up from us. Take the Virgin Money Credit Card for example. It's been the market-leader for 0% balance transfers for years, and we've been big fans for just as long.
Reviewing financial products is a large part of what we do. But we're not the only ones. Defaqto is an independent financial research company which specialises in analysing and rating products. You may never have heard of them, but the firm's Star Ratings are very well-known in the industry.
So it's about time we looked at how some of our favourite credit cards and current accounts score on the Defaqto Star Rating scale. But first let me briefly summarise how Star Ratings work.
Defaqto Star Ratings
Star Ratings are applied to a range of products including credit cards, current accounts, mortgages and insurance products such as home, car, pet and travel.
The system is pretty simple. A product will be awarded between one and five stars depending on its quality. A product with a one Star Rating isn't necessarily bad, but it's likely to be fairly basic, and it won't have all the bells and whistles of a five star deal.
The quick table below shows what each Star Rating means:
|
Star rating |
Which means? |
|
* |
Simple |
|
** |
Limited |
|
*** |
Standard |
|
**** |
Good |
|
***** |
Excellent |
It couldn't be more straightforward really, could it? The system is a quick and easy way for you to identify whether a product is any good relative to others in the same category.
But that's not to say the assessment isn't rigorous. Credit cards, for example, are rated on the basis of 45 different criteria. This includes factors like introductory offers, interest-free periods, repayment arrangements and extra benefits such as travel insurance or Airmiles. Meanwhile current accounts are rated on 87 criteria including interest rates, overdraft facilities, incentives and foreign transactions.
After all this, only around one in ten products (13% this year) manage to earn a top five star rating.
Don't just take out word for it
Now let's take a look at how some of the credit cards and current accounts in our comparison centres have fared:
Five star credit cards
- One of Defaqto's five star choices is the Barclaycard Platinum with Balance Transfer. This is relatively new entrant into the credit card market, but we've given it our stamp of approval because of its generous interest-free period on balance transfers which last for 15 months. It's a great choice if you've already had the Virgin Money Credit Card and you still have a balance left on your card. Take a look at our Great new balance transfer card video to find out more.f
- The Barclaycard Gold Card has also earned a five star rating. The interest-free period on your balance is shorter - lasting until 1 March 2011. But this is fairly competitive and it also charges one of the lowest transfer fees on the market of 2.5%.
- For the over fifties the Saga Platinum Credit Card has also won a five star award. I really like this card because it offers the same 0% period on balance transfers and spending, so there's no chance of falling foul of a negative order of payments which could significantly ramp up your interest charges.f
- Finally, the MBNA Platinum Rewards Card also gets five stars. This card has a pretty good 13-month 0% balance transfer offer, and also a decent rewards points programme, but I'd urge you to only use the card for balance transfer or spending, not both. Otherwise, the negative order of payments will rear its ugly head once again.
Remember, the Star Rating system doesn't just look at the features and benefits of each card. It also takes into account other important factors such as how the provider accepts or rejects applicants and application times for an all-round assessment.
Five star current accounts
Of the half-dozen current accounts in our table, the Alliance & Leicester Premier Current Account has been awarded five stars. This is another product which has been popular at lovemoney.com.
It's a great choice for those who can pay in at least £500 a month and want to switch banks, but need an overdraft. You'll get a completely interest-free facility for 12 months up to a maximum of £2,000. After that you'll be charged a usage fee of 50p per day up to a maximum of £5 per month. What's more you'll earn £100 cashback when you switch.
Meanwhile one of our best buys for in-credit rates is the Alliance & Leicester Premier Direct Current Account which pays 6% AER fixed on balances of up to £2,500 for a year (balances over this amount earn 0.10%) as long as you can pay in £500 a month. Defaqto has given this account four stars.
So it's good to see that the credit cards and current accounts we like are highly rated elsewhere too. If you have a question about choosing the right products, head over to our excellent Q&A tool. Here you can ask the lovemoney.com community for more help. Once you've chosen the best card for you, make sure you join our Pay off credit card debts goal so you can clear your debt as soon as possible.
Compare credit cards and current accounts at lovemoney.com
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