Aqua launches new top credit card for borrowers with bad credit

by John Fitzsimons on 26 June 2012  |  2 comments
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The new Aqua Advance card boasts an interest rate that falls sharply over time.

Aqua has launched an innovative new credit card for borrowers with bad credit, with an interest rate that declines over time.

The Aqua Advance card starts out with an initial representative rate of 34.9% APR. However, so long as you manage your account responsibly, you’ll be able to cut that rate by 5% a year over three years, leaving you with a pretty competitive rate of 19.9%.

What does the Advance card offer?

Aqua cards are designed for people who have either had credit issues in the past (things like County Court Judgments or missed payments) or who have no credit history at all and want to get started building one.

The Advance card comes with an initial credit limit of between £250 and £1,600. There’s a 24-hour helpline, text message reminders before your payments are due and no foreign currency exchange fees so you can even feel comfortable using it abroad.

What counts as ‘responsible’?

According to Aqua, managing your account responsibly is a pretty modest task. All you have to do is stick to your credit limits and pay at least the minimum payment on time.

So, let’s take a look at how it compares to other cards in this market.

The Aqua Reward card

Alongside the Advance card, Aqua has also launched the Reward credit card. This is an innovative card in its own right, paying 3% cashback on all of your purchases, capped at £100 cashback a year.

Unlike other cashback cards, there’s no fee to worry about either. Personally, I’m still a little wary of the cashback offer – the whole point of a credit builder card like this is to ensure that they are managed responsibly, without the borrower over burdening themselves with credit they can’t pay off. For many borrowers, that’s why they need a credit builder card in the first place!

Aqua argues that the capped cashback and small credit limits on the card (between £250 and £1,600) means that there’s little danger of borrowers over exposing themselves.

For more on cashback cards, read Earn top cashback on your spending.

The Aqua Classic

As well as launching the Advance card, Aqua has also cut the rate on its existing Classic card from 35.9% to 32.9%.

Again, there’s an initial credit limit of between £250 and £1,600, depending on your circumstances.

Vanquis Bank Aquis Visa

The lowest rate I’ve found for credit builder cards - at least initially - comes from the Vanquis Bank Aquis Visa, which carries a representative APR of 29.8%.

The Vanquis card has a maximum credit limit of £1,000. However, this limit may be increased after your fourth statement, with further increases every four months up to £3,000. It all depends on how good you are at paying your bill on time.

Barclaycard Initial Visa

The Barclaycard Initial Visa has a slightly higher rate of 29.9%. Again, you’ll start with a low credit limit (a minimum of £250) which will then be increased over time should you require it, so long as you have kept to your payments previously.

As a result, if you’ve had more recent money issues, you’re best off considering a different card.

Granite Credit Card

With the Granite card, you start with a credit limit of no more than £500. Then every four months you may be able to increase this, up to a maximum of £3,000, much like the Vanquis card.

However, there are two key differences. Firstly, the rate is far higher at 34.9%.

The second difference is actually a positive. Taking out the card gives you access to the Granite Rewards scheme. The scheme offers a range of discounts from retailers including Debenhams, Pizza Express, B&Q, Sainsbury’s and play.com.

Capital One Classic

The Capital One Classic card offers a credit limit of between £200 and £1,500. It comes with a rate of 34.9% and you’ll get a response to your application within 60 seconds.

Vanquis Visa

The Vanquis Visa comes with online and text message account management, but a whopping rate of 39.9%.

How to use a credit builder card

If you have a dodgy past when it comes to borrowing, a credit builder card offers you a route out. But you really have to use the cards properly.

To me, that means only putting a minimum of spending on there, and then paying it off, in full, on time. The interest rates on all of these cards are pretty massive compared to mainstream cards, so don’t let yourself get whacked with interest unnecessarily.

Put a small slice of your regular spending – your food shop, for example – on the bill each month and then clear it in full. You’ll improve your credit rating, and it won’t actually cost you anything to do so!

For more tips on improving your rating check out How to build an excellent credit history.

More on credit cards:

The 30 best credit cards for summer

The best debit card to use abroad

MasterCard ordered to dump rip-off intercharge fees

Pay no interest on your credit card for 22 months

Sainsbury's launches top low-rate credit card