Credit Cards Online Information

The first sign that consumers are putting a brake on spending as they stagger under a mountain of debt emerged last week with reports that sales are slowing in the shops.

But so far the messages coming out of the high street are mixed. Shares in retailers such as Next, Debenhams and Marks & Spencer fell with the news of a quiet September. Yet the CBI contradicted this picture, indicating that shopping activity remained buoyant, particularly in housing-related stores such as those selling carpets and furniture.

"Once you start getting mixed messages, it usually means something is changing," says HBOS group economist Martin Ellis. "It is conceivable that consumers are becoming nervous. They are still borrowing at record levels, and at some stage they will have enough of piling on debts. They will start to be concerned at the economic prospects. The question is when we reach that point."

Taking on credit has never been cheaper, with mortgage rates at historic lows and credit cards charging nothing at all on borrowings. And now a new breed of plastic, the "pick-and-mix" card, has arrived to entice customers to spend even more.

These cards allow shoppers to select for themselves the features they wish to enjoy on a credit card, ranging from zero introductory interest to loyalty bonuses. But while in theory they provide customers with the opportunity to tailor their plastic to meet their specific needs, they would seem to fly in the face of attempts to simplify credit cards so that customers understand exactly what they are being charged every time they borrow.

It is understood that MPs on the Treasury Select Committee are soon to launch an investigation into the credit card market - which currently comprises 55 million cards chosen from 1500 variations. The committee's report into banking services, published earlier in the summer, concluded that customers were bewildered and misled by annual percentage rates that did not fairly reflect the cost of borrowing. The MPs are now planning more work to investigate how credit cards can be made simpler and more transparent.

RBS Advanta has introduced a pick-and-mix card that potentially provides customers with 360 different choices. For example, they can choose what introductory credit interest they wish to pay, ranging from zero to 4.9%; and how long that rate lasts, from six months to eight months.

They can also choose whether to opt for air miles or cashback of 0.75% on their spending - or go for no loyalty points at all. The long-term rate they subsequently switch to when the introductory discount is finished will depend on these selections. So someone who opts for no introductory discount and no loyalty points will enjoy the lowest deal of 11.9% APR - or 10.9% APR with the platinum card available to those earning more than (pounds) 20,000. Customers who pick the maximum introductory discount and cashback will subsequently switch to the highest standard rate of 17.4% APR.

Customers who never borrow, and who pay their bills at the end of the month, should opt for the loyalty points, while those with big outstanding borrowings should opt for the maximum discount with a view to switching out at the end. Haphazard payers who dip in and out of the red on a regular basis may prefer an ongoing cheaper rate.

Pick-and-mix cards were first launched by a company called Accucard, which manages offers on behalf of the internet insurer More Th>n and easyMoney (part of the easyJet group). "Each customer is assessed individually and will pay interest ranging from 9.9% APR to 20% APR depending on the risk," says spokesman Martin White. "But on top of that they can also select their own level of reward, up to 1.6% cashback. This would mean that for every (pounds) 1000 spent on the card you got (pounds) 16 back.

"I don't accept these cards are complicated," White adds, "but I acknowledge that they will not be suitable for everyone."

The other main player in the pick-and-mix market is Virgin Money, which offers the unusual option of letting customers borrow cash at 0% interest for six months. Essentially customers can either chose the zero route and pay a higher standard subsequent rate - up to 15.9% APR - or they can forgo the rewards and introductory offer but peg the rate at 10.9% APR.

However, if it's simple, cheap money you're after, then it's worth remembering that Nationwide, Egg, Tesco and RBS Advanta all have 0% introductory interest cards which are easy to understand. At Tesco and RBS the low rate applies until next June.

And if you are simply looking for a long-term low rate, Intelligent Finance (www.if.com) charges just 8.9% interest on purchases and balance transfers - but offers no cashback.

Those who never borrow are the ones who benefit most from loyalty or cashback cards. The Halifax refunds 0.5% of cash spent on its cashback card up to (pounds) 1000, and 1% thereafter.

And Barclaycard has linked up with Debenhams, BP and Sainsbury's to launch the Nectar points-based reward card. You earn points for spending in the stores and petrol stations - and can earn even more if you pay with your Barclaycard. The points can be exchanged for a range of goods and services including videos, DVDs, flights and cash vouchers.

# posted by Medical Information : 2:54 AM