Sainsbury’s offers 6.9pc credit card
Retailer Sainsbury’s is offering a credit card with an interest rate of just 6.9 per cent on new purchases, but the card is only available to nectar card holders with good credit ratings.
According to new research by the retailer, the number of cards offering a lower-rate APR over a long-term, with no introductory offer, has fallen by 35 per cent since 2007.
As well as offering the lowest APR currently available, the new Sainsbury’s card comes with no balance transfer fee.
Sainsbury’s research found that despite the low base rate, there are just four cards on the market offering rates below 10 per cent APR on purchases.
Five years ago 14 cards offered an APR below 10 per cent.
Sainsbury’s new card is likely to appeal to consumers who don’t want the hassle of having to shop around for another card when an attractive introductory rate expires.
Cards with a low introductory offer often revert to a high APR at the end of the introductory period, which can be a little as 12 months.
Stuart McKeggie, Head of Sainsburys Credit Cards, said: “Customers choosing a credit card must remember to be realistic about what will happen to their rate at the end of the introductory offer.
“There are so many introductory offers available today and many people may think this is the best option for them but that might not necessarily be the case.
“It’s important to think about your card usage and consider the benefits of introductory offers against the benefits of cards with good standard long-term rates; in many cases the latter could make more financial sense and be more convenient.”
Separate research by moneysupermarket.com suggests that consumers are increasingly relying on overdrafts, credit cards and savings to tide them over until payday.
However the study suggests that they could be eroding their retirement income by using these forms of credit because of the interest they accrue.
Kevin Mountford, Head of Banking at moneysupermarket.com, said: “For those relying on credit cards or their overdraft as a fall back until pay day, it really does pay to research your options and think about the additional interest you could end up forking out beforehand.”