A fairer credit card

It isn’t often that credit card companies come up with something genuinely innovative and in the consumers’ best interest but the latest offering from Saga, the over-50s club, the Saga Platinum Card, is certainly worth considering.

Many credit card users like to make use of what is virtually ‘free money’ by taking advantage of 0% balance transfer offers promoted by dozens of card issuers.  Why not put, say £5,000 on a card and pay no interest for a year and invest the money at what, until recently, could have been 7%, making a nice profit of £350?

The problem is that if you then subsequently use the card for purchases, any money paid off the monthly outstanding balance goes to reduce the £5,000 interest free balance transferred first, rather than the purchases on which you would typically pay around 15% interest.

What the Saga Platinum card does is allow you to transfer a balance at 0% for the first six months, but when you make repayments, the money reduces the most expensive debt first, so you can use the card for purchases and still retain the 0% interest facility on the balance transferred. 

In addition, there are no interest charges at all on purchases for the first six months – another worthwhile bonus.  But money paid off the outstanding balance after the first six months will be used to reduce balances incurring interest charges first.  Saga Platinum’s interest charge on purchases after the first six months is 15.9% - about average. There is a 2% charge for balance transfers, relatively cheap compared with the industry average of around 2.75%.  Cash advances also incur a 2% charge.

There are other benefits too.  There are no foreign currency charges for transactions in Europe – useful for those going away over Christmas and New Year.  This will typically save around 2.75% on all transactions.  Nationwide’s Visa card is one of the few which along with the Saga card makes no charge for transactions abroad.