28 June 2007
Consumers are being warned that the launch of BT's new credit card is not as good a money saving offer as first thought.
Earlier this week, the home phone supplier and broadband provider announced the launch of its own credit card which promised to lower consumers' phone or broadband bills each time it is used.
However, independent price comparison and switching service uSwitch.com has warned that the credit card could end up costing consumers more than they think.
Nick White, Director of Financial Services said that the MBNA-run credit card could end up costing consumers over 200 in interest for a saving of just 15 per year on a BT broadband or phone bill.
"BT's new credit card, which is designed to save consumers money on their bills, could end up being a costly lesson in the complex 'order of repayments' that can fool the most savvy customer," he explained.
"This card generously offers consumers a 0% balance transfer deal for 12 months and 0% on new purchases for just three months.
"However, if a balance transfer is made to the card followed by new purchases, consumers will end up paying interest on the new purchases for the remaining nine months of the deal unless the entire balance is paid off in full after the first three months.
"Due to the order of repayments, any payments made to the credit card will pay off the balance transfer first followed by new purchases.
"This completely defeats the object as consumers can only get a discount on their BT bill by making new purchases on the credit card. Surely if this offer was in the consumers' best interest, it would give 0% on new purchases for 12 months to avoid interest charges that could completely negate the BT discounts," he concluded.
© 2008 Adfero Ltd
Content for the uSwitch.com market news service is provided by a third party, Adfero Ltd. Whilst uSwitch.com makes reasonable efforts to check the reliability of this content, uSwitch.com does not guarantee the accuracy thereof or endorse the views or opinions given by Adfero Ltd, unless expressly stated otherwise.