At the end of the year, watchdog, the Financial Conduct Authority (FCA) aims to review the UK’s £150billion credit card market. Campaign group Which? is putting particular pressure on the FCA to address the ability for consumers to view and compare a wide variety of credit card deals.
By making adverts clearer and comparisons more accessible, consumers will be better able to choose credit card providers that meet their financial needs and circumstances. This is particularly necessary in today’s borrowing climate – making multiple applications for credit can damage your credit score and often results in higher rates.
In order to clarify some of the best credit card deals currently available, take a look at our quick guide:
Best for customer service
Recent findings from uSwitch have revealed that traditional banks and card firms are letting customers down. Research showed a 39% gap in satisfaction between the best and worst card provider. Lloyds, Barclaycard, HSBC and RBS were among those failing to set good standards.
The winner of the ‘best card provider’ (and ‘best rewards’) was in fact American Express – particularly for ‘customer service’, ‘online service’, ‘value for money’.
Best retailer cards
M&S Bank and Tesco Bank are in a similar league to American Express in terms of customer care. Further findings from uSwitch suggest M&S Bank is the ‘most trusted provider’, while Tesco Bank ranked the highest for ‘best overall satisfaction’, ‘best value for money’ and ‘most recommended’.
uSwitch spokesperson, Jafar Hassan says: “It is great to see retailers redefining cards to meet the needs of today’s savvy shoppers with generous rewards, tempting cashback and good customer service.
“In theory, the larger players should be the ones offering the most competitive products and interest rates, but it is clear that in practice that is not the case.”
Best balance transfers
Clearing debts cheaply requires choosing a credit card with a balance-transfer deal. Currently, Barclaycard is offering 31 months interest free, but if you’re interested in retailer cards, Tesco is offering 30 months at 0%.
The balance transfer fee is 2.89% with Barclaycard and 2.9% with Tesco.
Andrew Hagger from financial site MoneyComms says: “Deals of this length will give you a little extra time to pay back what you owe without accruing extra interest.”
You must however make sure you pay off any debt before the promotional rate ends to avoid facing higher charges.
Best for purchases
Purchase cards are available at 0% for 18 months with Tesco Bank, and the bonus is you will collect clubcard points on your spending. The next best retailer is Sainsbury’s which offers a card at 0% for 16 months.
As for traditional banks, Santander offers the best card for purchases with 18 months interest-free.
Best cards for cashback
Cashback cards will benefit those who use their credit card regularly and are disciplined about paying off the balance in full every month.
The Platninum card from American Express pays 5% on purchases made in the first three months with a cap of £125. Following this is pays a rate of 1.25%. It does however come with an annual fee of £25.
Alternatively, Santander’s 123 card offers 1% on a supermarket spree, 2% on department store spending and 3% on petrol and travel.