In a recent bid to clamp down on credit card companies the Government has taken action to encourage providers to raise the minimum monthly repayments and encourage people to reduce their debts sooner. It’s all in the aid of tackling consumer debt which now stands at £55 billion on credit cards in the UK.
No. 10 then will no doubt be happy to hear that at a time when credit card providers have increased interest rates to an average of 18.8%, MBNA have introduced a card that offers ‘smart lending’ to the user. The card is called the ‘Rate for Life’ credit card and comes with an interest rate of 5.9% for the life of the outstanding balance transfer plus a lowered transfer fee of 1.5%.
However, when asked what the motivation behind the card was, MBNA’s Chief Marketing Officer, Greg Reed insists that it was their customers, not the Government, that encouraged the them to create the card: “We have listened hard to what customers want and I believe that this simplified, easy-to-understand, low rate card will have enormous appeal to customers.”
The ‘Rate for Life’ credit card will make up a big part of MBNA’s current line-up that includes affinity football credit cards, charity cards and rugby cards. Its release could not be better timed with recent research from the UK Cards Association showing that a quarter of the 30 million credit card holders in Britain had their interest rates increased over the last year. These hikes are in addition to the increase in the average costs for balance transfers, cash withdrawals and foreign transfers as lenders look to protect themselves from bad debt.
Whether the ‘Rate for Life’ card can draw card-holders away from the 0% offers and cashback deals remains to be seen, but with an increasing number of people looking for longer lasting, lower interest rates MBNA’s 5.9% could prove to be a stand-out proposition.