June 7, 2005

Flat rate seem to be the next step forward by credit card companies as they look to putting deals in place to take over from the 0% deals that have basically cost them millions in lost interest rates.

A flat rate credit card will mean instead of receiving a credit card with a 0% interest free period for anything up to a year, you will pay a low flat rate for the history of the balance you have transferred from another credit card issuer.

This is being done to recoup some of the money that the credit card companies have lost to the rate tarts over the last few years, though at the end of the day the creation of the rate tart was all of they’re own doing, by totally disregarding the savvy of credit card customers.

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Many have also introduced charges to balance transfers, on the 0% deals, again to try and claw back some of the money that they lost in interest payments, and these charges will usually be a total of 2% of what’s owing, to a maximum of £50. Barclaycard were one of the first credit card issuers to come up with this charge and quite a few others have followed suit including, MBNA, Tesco and the Royal bank of Scotland.

This has led to predictions that with a 0% deal attached to it, will all have a charge for balance transfers and with over 90 out there that have the offer right at this moment, the loss of saving money on interest by the rate tarts is going to be hit severely.

But the thing to remember her is that the introduction of the flat rate credit card is not solely down to the wishes of the credit card companies, many credit card customers who had no desire to jump from one credit card to the next also let the credit card companies know that this would be a preferred option for them and would keep them in remaining loyal to the one credit card.