Another sneaky credit card trick

by Ed Bowsher on 14 September 2009  |  3 comments
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I've spotted a sneaky credit card trick by MBNA.

My last blog post was about Barclaycard's latest credit card wheeze -  cashback on interest payments.

Well, here's another one. This time, it's from MBNA.

It's now charging a different interest rate on balance transfer debt to purchases debt - at least for some customers.

If you look at a summary box for any MBNA card, you'll see that the APR for purchases for is always 2% lower than for balance transfers. So for the MBNA Platinum Plus card, the purchases APR is 15.9% while the balance transfer APR is 17.9%.

Now, before I go any further, I should say that the Platinum Plus card is a 0% balance transfer card and the interest-free period lasts for 13 months. So for those 13 months, you won't pay any interest.

My concern is about what happens when the introductory 0% has ended. The usual drill is that you pay the normal APR on the card; the same as for purchases. But according to the MBNA summary box, you pay 2% more. That's a sly way of bringing in some extra cash that most people won't notice.

Now MBNA tell me that, in reality, 'the vast majority of customers have the same balance transfer and purchase rate.' Different customers get charged different rates. My reply is that I'm glad  not everyone is paying a higher rate but I don't see why anyone should be charged more.

I've looked around at the other credit card operators and, as far as I can see, it's only MBNA that does this. Thing is, though, MBNA is a bigger player in the UK credit card market than you may realise. That's because it also operates cards for lots of other brands including Virgin Money. For all of these cards, the summary box says that a higher rate is charged for balance transfers than for purchases.

Of course, there's a simple way of making sure you don't get caught by this trap.  When your 0% period ends, apply for a new 0% card with a different operator as soon as possible. Then you won't have to pay a rip-off interest rate on your outstanding credit card debt.

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