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Barclaycard Combinations 25/3/05Barclaycard are gearing up for the pilot of an innovative new financial product, which could revolutionise the way some of us manage our credit cards and personal loans. Barclaycard Combinations is a credit card and personal loan bundled into one package that works just like an ordinary credit card with the added option of transferring some or all of the debt into a separate loan fund with a lower interest rate three times a year. As usual, consumers will receive a statement each month, but it will detail outstanding balances for the credit card and the loan to give one overall figure. In addition any payments made over the minimum will go towards the more expensive credit card first, a move which will surely be welcomed. The pilot will be targeted towards 100,000 of Barclaycards customers and is set to begin shortly. The company are confident the product is fairer and encourages responsible borrowing and it would seem at least some consumer organisations maybe tentatively in agreement. Which? seem welcoming of the scheme but have reservations that some consumers may find it complicated. Certainly Barclaycard Combinations is new and works differently than anything else on the market. Barclaycard also hope that Combinations will reduce some of the criticisms lodged against credit cards in general. One particular worry about this new credit card/personal loan can be dispelled right away. The credit limit is set for the overall package and not individually on the credit card and personal loan so it wouldn’t be possible to escalate debt problems simply by transferring debt from one to other. All seems great so far but are there any downsides? Well naturally as with any financial product you’re going to have good points and bad points. What levels of interest will consumers actually be charged? For the pilot rates are set at 9.9% for the credit card and 6.9% for the loan. Not bad, but not great either, personal loans are available from under 6% and credit cards from under 7% from some companies. Another point to bear in mind is that these rates are set for the pilot, should the scheme take off rates may be higher to bring in more profit for the company. Citizens advice raise the point that consumers need to be aware of how much the loan will cost over its entire lifetime. All in all an interesting experiment
in the credit card and personal
loan market and one that could be good news for some borrowers
due to the simplicity of having everything in one package. For others
shopping around for the best individual credit card and personal
loan rates may be better. However a lot will hinge on how well it
goes over with Barclaycard's
customers in the pilot and what interest rates will be for the product
if it is launched nationally.
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