The end of free credit cards? | Moneywise
Fee-charging credit cards could soon become the norm, with customers paying a monthly fee in return for features like balance transfers, a low interest rate and cashback.
Egg has this week become the first major credit card provider to launch a mainstream fee-based card, and experts believe other providers will soon follow suit.
The new Egg MasterCard costs £1 a month (£12 a year) and in return customers receive 1% cashback on all purchases made at MasterCard outlets, up to £200 a year. This means people only need to spend £100 a month on their card in order to recoup their monthly fee, as long as they pay off the balance in full every month and avoid interest charges of 16.9% APR.
The Egg MasterCard, which is available via online-only application from 14 July, also comes with a balance transfer rate of just 8.9% for life, and there is no fee to transfer balances from other cards. In comparison, the top balance transfer credit cards offer 0% for up to 16 months (subject to a fee of between 2% and 3%) and then revert to around 17% APR.
Egg consumers will pay £145 interest on the average balance transfer (£1,846), according to uSwitch.
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