Capital One Premier

There are two types of basic credit card in the financial marketrplace. Type A – Low interest rate aimed at people who have a track record that they can be trusted. And then there are Type B Cards which are for people who have had financial problems in the past.

I’m ignoring the Gold and Platinum cards in my assertion above, because for this opinion I am taking a look at one of the Type B Cards – for the less than financially astute!

CAPITAL ONE basically aim at the lower end of the market - for people who can't get a credit card anywhere else. They also offer a ‘Platinum’ card, but in all honesty, If you are of the kind of financial standing and awareness to warrant a ‘Platinum’ card, then you will be looking at places other than Capital one to provide your facilities.

These are the kind of cards that you get after persistent ‘junk’ mailings. My son was a very naughty lad when he left school and hammered his first credit card so hard and so quickly that it he was blacklisted after just three months! Well, my lad has since had a loan turned down by his bank - not because he is in really dire financial straits, but primariliy because of that first indiscretion with his credit card. Mud sticks – you know.

With credit easy to come by these days for the younger and more financially niaive (oh yes, we’ve all done it), I suppose it was not long before the mail-outs began to offer him a chance to get back on the ‘credit ladder’.

Capital One offer two cards - the Platinum which I mentioned briefly above and the Premier. It is the Premier that is designed for the less financially responsible of us/you. You are guaranteed a credit limit of between £200 and £1000 - not much, but enough to get you started and enable the user to show that he or she is now responsible enough for a credit card.

They make it very easy for you to apply. The application form is pretty basic, just the usual name, address, contact details etc, length of employment etc.

And then, you wait – not long…Wow – I’ve got one!

Anyway, they charge an annual fee of £10 for providing the card – but that’s a minor price compared to the Annual Interest rate you pay. Let’s not forget that while some credit card companies are sucking in new customers with single figure interest rates, this Capital One card really you makes you pay for your ‘past’ - 29.9% interest rate !

I know that if you only have a small amount outstanding, because your credit limit is relatively low, the interest rate is not crucial , but Capital One hit you in other ways to. If you are one day late in making your minimum (or otherwise) payment – you get slapped with a late payment fee of £18 !!

Because of the interest rates, if you decided to only pay the minimum payment one month and had, say £200 outstanding, you would actually not be repaying anything. Interest charges are split so you pay one percentage rate for ‘purchases’ and another on anything still outstanding from ‘cash advances’. Currently rates are just above 2% per month and the ‘minimum’ monthly payment is 3% or £5 whichever is greater.

•So it's not cheap if you use extended credit.
•It's not cheap as you have a big annual charge (not as big as some I grant you) either.
•Not cheap if you are late in paying.

But, I guess it is a small price to pay, if you are looking for a second chance to prove you can handle a credit card. However – be warned. It’s the old case of ‘Catch 22’. Because you have been a ‘bad boy’ in the past, you must pay through the nose for your fresh chance. And paying heavily is not exactly what you can afford to do – otherwise you would not have been in that state in the first place.

If you are interested, look for one of their promotional leaflets next time it drops out of a magazine or comes through your letterbox. Then rebuild your credit, act responsibly and get a better rate and a better deal elsewhere. Good Luck.

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• NOTE – Providian, another US Company are another to offer the same service, but I understand they are now in dire financial trouble themselves.
Also, Barclaycard have just launched their own high interest rate card the ‘Barclaycard Initial’ – aimed at the ‘lower’ end of the market.