Spoilt for choice

By DAILY MAIL REPORTER
Updated: 19:00 EST, 24 January 2002

THE already overcrowded credit card market has just admitted another two entrants keen to get a piece of the action. Virgin and Halifax have stormed in with what they see as tempting offers.

The Virgin deal claims to offer a bespoke service, allowing customers four options. Halifax - now merged with Bank of Scotland as HBoS - offers no interest for five months, reverting to a dull 17.9% after that.

Virgin says it is trying to shake the apathy of the 70% of credit card customers who use the 'big four' clearing banks and are thus stuck on interest rates between 17.4% and 18.9%.

It is offering four choices. The first option is an interest rate of 12.9% on purchases, with a fixed balance transfer rate lasting for six months of 3.9%. The second also has the 3.9% balance transfer, but a higher APR of 14.9%, although it gives access to the Virgin Rewards scheme.

Under this scheme you can amass one point for each £1 spent and use the points to buy discounted products from the Virgin Group, which offers such things as holidays and books.

The third option also gives Reward points but has a flat APR of 10.9% and no balance transfer rate. And the final choice is an APR of 12.9%, a special balance transfer rate of 2.9%, entry to the Rewards scheme but an annual fee of £25. You can swop between options twice a year.

Halifax's deal is easier to understand. You get a 0% rate on spending and balance transfers for five months. Then you revert to a rate of 17.9% - or 16.9% for the Gold or Platinum cards.

With the Bank of England base rate at 4%, it's not hard to see that these are truly awful rates, albeit in line with the rest of the High Street's card offerings.

Which card is right for you depends on what type of customer you are. If you pay off in full each month, then the rate of interest doesn't matter, as all you're doing is using your card as money management. In this case, you may want to look for a card with some kind of incentive, such as money off bills and vouchers or cashback on what you've spent. Examples include Goldfish for the former and Alliance & Leicester for the latter.

If you've got a substantial balance, then look for a low transfer rate. Egg is offering 0% on balance transfers and new purchases until 1 July. However, the rate then goes up to 12.9%. There is also a cashback of 0.5% on all purchases.

If you can't be bothered to chase zero or low-interest deals, then you need a card with a low or fixed rate and a pledge not to increase the rate within a reasonable time frame. Intelligent Finance's standard rate is 8.9% on transfers and purchases. And Halifax has a low fixed rate of 11.8% with an interest-free period: without, the rate is 10.8%. Cahoot, part of Abbey National, has a rate of 7% to 11%.

Kate Liptrott, from Hoo in Kent, moved her £2,000 credit card balance from Barclaycard to Egg last year. Kate, 29, says: 'I am always on the look-out for good deals. I'm not bothered by any incentives such as holiday discounts - they're cheap enough as it is.'

Indeed, when her 0% deal comes to an end, she's planning to move to another card provider. 'I'm keeping a watch out for a good deal,' says Kate, a securities administrator for a stockbroking firm. 'I've seen a deal from Royal Bank of Scotland for 2.9% which looks attractive.'