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Is Britain a credit card world-beater?

Macro shot of red credit cardWe take a look around the globe to see whether the UK’s love affair with plastic is matched in other countries.

Despite the credit crunch, Britain’s love affair with paying by plastic has continued without significant interruption.

Figures from the UK Payments Council indicate that at the start of 2011, there were more credit cards than people in Britain, with around 63 million cards compared to 62 million residents.

As of May this year, our total debt on plastic was nearly £60 billion – an average of £1,000 per person, and 13 per cent higher than the level in autumn 2008 when the banking crisis hit.

With lending on cards remaining buoyant despite economic problems, banks have been battling for new business with an array of best-buy deals being launched in the past few months.

But are we alone in our love of plastic? Is credit so readily available in other countries? And are the terms and conditions more or less favourable for borrowers?

The United States

Credit-card debt in the US rose for the first time in more than two years at the end of 2010, a sign of confidence gradually returning to American consumers.

Total debt in the first three months of 2011 was $765 billion (about £480 billion at today’s rates; or an average of £1,500 per person).

So what sort of deals are available to consumers on the other side of the Atlantic?

Citibank currently offers a great balance transfer and purchase Platinum Select card, which charges no interest on either type of debt for the first 21 months.

How this rates alongside UK deals

This compares favourably with the top British deal from Barclaycard: its platinum card gives borrowers 14 months interest free on both new spending and transferred debt.

Another difference in the States is what happens when the zero-interest period ends.

With the Citibank card, borrowers then revert to a standard rate of 11.99 per cent, 16.99 per cent or 20.99 per cent, depending on their credit score.

In the UK, most deals like this revert to a single rate, regardless of individuals’ credit ratings – in the Barclaycard case, the revert rate is 18.9 per cent a year, which is just over the UK average.

Lots of US cards come with an annual fee, but this one doesn’t.

Credit cards in Europe

The similarities between the US and UK are much greater than those between Britain and the rest of Europe.

Britain is thought to own almost two-thirds of the cards issued in the EU, and we’re responsible for about three-quarters of the total European plastic debt.

This could be a result of the Thatcher years, during which consumers were encouraged to take on more debt, and regulations governing lending were relaxed to a greater degree in the UK.

In Germany, for example, until 2010 the most common way to pay for online goods was by direct debit or bank transfer – only in the last 12 months have credit cards taken a lead in this market, according to Deutsche Bank.

In the UK, plastic has always been the most typical way of paying for internet transactions.

France has also been reluctant to embrace credit cards, relying more on debit cards and cheques. The French view of debt can perhaps be illustrated by the fact that it is against the law to write a cheque that you know will send your account overdrawn.

Whatever the reasons, our European neighbours appear not to have embraced the interest-free deals and special offers that characterise our credit-card market.

Cashback on the subcontinent

The credit card market may not be so long-established in India, but there are some attractive deals on offer.

The StanChart Manhattan Platinum Card, for example, offers 5 per cent cashback on all spending in supermarkets and department stores.

In the UK at the moment, American Express’s Platinum Cashback Card has a deal which pays 5 per cent cashback but only for the first five months – after that, the rate drops to a maximum of 1.25 per cent.

The bad news for Indians is the interest rate: StanChart’s card imposes an interest rate of 2.95 per cent a month. This might not sound bad, but it works out at more than 40 per cent a year.

Other countries

Cards appear to be more widely held in countries which have ties to the UK and US.

But the options aren’t that great down under: in Australia, Citibank (again) is offering a leading deal but the Clear Card, has an interest-free period of just six months.

On top of that there’s an annual fee of AUS$49, which is about £33.

And in Canada, there is a 10-month interest-free balance transfer deal on MBNA’s Platinum Plus card, but deals are scarce when it comes to low-interest purchase cards.




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Chris Torney

Chris Torney

Chris is personal finance editor at the Daily Express. He's been a journalist for more than 10 years and contributes to a wide range of finance and business titles.Read more from Chris



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