Positive Payment Order Affects Card Market

18th September 2010  

The move to Positive Payment Order is shaping the way products are structured in the credit card industry and this week the market leaders tweaked their offerings to try to stay at the top of our comparison tables. The UK credit card industry is undergoing radical changes at the end of the year with five new pieces of legislation coming online to improve the lot of the consumer.

Currently most credit card companies allocate customers payments to the interest bearing balances with the lowest interest rate first, but from the end of the year this will reverse so that the customer clears the most expensive balances first. Some companies have already announced their move to the fairer arrangements including MBNA and Virgin Money. Nationwide and Saga have always used the fairer system.

So who’s offering the best deals on balance transfer (BT) credit cards at the moment? Currently the best deal seems to be with relaunched Barclaycard Platinum Balance Transfer which offers 0% APR on balance transfers for 22 months. Also consider the NatWest Platinum Credit Card.

You should also look at the Nationwide Credit Card because as well as a good BT deal, it has other quality features like a low overseas spending surcharge as well as positive payment order. Remember though, deals change quickly, and to keep up with the latest BT news check back on our Compare Balance Transfer Credit Card tables. Our comparison information is updated daily.

With careful management and timing, it’s possible to move your credit card balances between 0% balance transfer deals, effectively ‘borrowing’ that money interest free. (Remember there’s nearly always a BT fee each time you move to a different card).

Until positive payment hierarchy becomes widespread however remember that you need to keep the efficiency of BT credit cards in perspective, and remember the golden rule ‘never use BT credit cards for purchases’. Most credit card companies still allocate your payments to cheaper interest balances first and the higher interest items like new purchases last.

Don’t be surprised if when the industry has completed the transition to positive payment order, many of the existing BT deals disappear.

Depending how long you anticipate it will take you to clear any outstanding balances, also consider the low interest BT cards like the Barclaycard Platinum Simplicity Low Interest. This offers a comparatively low rate of interest on BT, and lower BT fees than the 0% on BT cards.

That said, here’s a checklist for getting the best out of BT cards, and things you should consider and be aware of!

  • Most BT deals are for new cardholders only, and won’t allow transfers from existing credit card accounts within the same banking group.
  • The ‘0% on BT’s’ deal is normally for a limited time (usually the first three months of a new card account) and so if you want to take advantage of this facility, make sure you do so within the time limit.
  • Set a reminder on your phone or your PC to review our 0% on BT deals again around 2 months before the end of your 0% period. If you want to switch your credit card balance to the next best BT deal around, it can take up to 6 weeks to process the application and make the BT and you need to plan the transition carefully.
  • Remember making several credit card applications in a short period of time will harm your credit score. Unless there’s a good reason, more than three applications a year may be looked at negatively.
  • If you’re worried about your credit score for getting a new card, be cheeky and call your existing card provider and tell them you’re considering a new BT deal with a competitor, but you don’t really want to bother with all that paperwork. Ask them if they can do anything about the interest rate on your existing credit card. If you’ve got a good payment record with them, they would probably prefer to keep you as a customer and may offer you a better deal.
  • Make sure you can comfortably afford any new minimum payments when considering any new credit card deals. Its great to be saving money on interest, but each card has a different minimum payment structure and you obviously want to be looking at being able to reduce your level of overall debt as well as making a net saving on interest.

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