MBNA announced last week the launch of a new ‘Rate for Life’ card offering an interest rate of 5.9% and a reduced handling fee of 1.5% on balance transfers. And it seems they couldn’t have timed it better with recent Industry figures showing that credit card interest rates are at their highest point for 12 years.
The cost of using plastic has risen by over 25% in just four years and last year alone almost seven million card holders saw an increase in their card interest rate. The average rate of interest on a credit card in the UK has now reached 18.8%, the highest since 1998, so it’s no surprise that MBNA’s new low rate credit card offering is proving to be very popular.
In a decade that’s seen more credit than ever before, the banks are now making consumers pay (again) for their spending through high interest rates, leaving many looking for better and easier ways to manage their debt (more here). This is a fact that Greg Reed, Chief Marketing Officer at MBNA is all to aware of: “We have listened hard to what customers want and I believe that this simplified, easy-to-understand, low rate card will have enormous appeal to customers.”
MBNA, who are more readily associated with their range of affinity football credit cards and other branded offerings, have introduced the card in response to a need for ‘smarter lending’. Both the Financial Services Authority (FSA) and advice charities have campaigned to credit card providers to help people manage their debt effectively, without luring them in to short-term promotional offers.
In the ‘Rate for Life’ card, it seems MBNA have backed the campaigning and given the 30 million credit card holders in the UK a chance to manage their card debt at a third of the average interest rate.