Is your loyalty costing you dear?

Posted in 'Personal Finance' by Richard Catlin

04 November 2008

Almost half of us choose to stay loyal to our most used credit card, despite the likelihood of being able to get a much better deal elsewhere.

Our 2008 Banking and Credit Card survey found that 33% couldn’t see any benefit in switching and a further 11% couldn’t be bothered or didn’t have time to switch.

Around half have used their main credit card for over 3 years – way beyond the scope of typical introductory offers – and so therefore are probably paying a lot more than they could be.

Switching to a new card offers a number of benefits. Depending on what you use your card for, these include significant savings on interest payments, cashback and free flights. Just a couple of minutes filling in an online application could see you get some great card features or save a fortune in interest charges.

What’s more, our many years of analysing credit files has shown that the average credit score is at a seasonal high in the month of November – meaning that your chances of being accepted are higher. You’re also fast running out of time to get a new card in your wallet in time for Christmas spending.

Switching a £3000 balance from a credit card with an APR of 16.9% - pretty much average these days – to a 0% balance transfer card such as Virgin, would save you around £500 over the life of the offer.

As cashback cards go, you can’t do better than the American Express Rewards card. Offering a whopping 5% cashback on purchases for three months (up to a maximum of £200 per month cashback) and then between 0.5%-1.5%, depending on how much you spend. Typical APR is 18.9%, with no annual fee.

Switch to an easyJet card and you’ll not only get 0% on balance transfers for 9 months (a fee of 3% applies) but also a free flight worth £40. Typical APR is 15.8%.

Finally, if you want to do your bit for the environment (and your wallet), then the Co-operative Think card is perfect. Half an acre of Brazilian rainforest will be purchased in your name the first time you use your card, plus a donation of 25p for every £100 you spend. You’ll also get 7% on balance transfers for 6 months and a special rate at selected ethical retailers. Typical APR is a lower than average 12.9%.

Click here to find all credit card offers matched to your credit score to see what benefits you could be missing out from.