Tesco have continued in their endeavour to diversify their services by releasing an innovative new credit card that is targeted at assisting people who have a poor credit rating and cannot acquire finance from mainstream providers.
The Foundation Clubcard credit card was released by the supermarket giant in order to help those who have never possessed a credit card previously or have little knowledge about how they work and the best way to use them.
The initial rate attached to the card is a competitive 28.9% APR, which it expects to be able to offer to over 50% of applicants, highlighting that those who do qualify will be entitled to a ëmarket leading rateí.
The banking arm also identified that card holders would be able to acquire Clubcard points from purchases made on the card, which can then be used in stores across the country to pay for food and other consumer goods.
All applicants must be over the age of 18, and will be required to have a salary that exceeds £5,000 each year. Surprisingly, the card can come with a credit limit as low as £250, though this might be an attractive component to some as they can simply utilise the card for credit rating improvement purposes.
Tesco have identified that the card was created in order to achieve this precise purpose, so that they are able to receive a lower APR rate from a greater number of mainstream deals in the future, rather than simply applying for them, having them rejected, having their credit rating take a hit as a result, and then being forced into entering into loan arrangements at a substantially higher cost than they should.
Tesco said: “We understand some customers can find it difficult to access credit if they have a limited credit history.
“The Foundation credit card can help these customers build their credit rating, which may help them access lower APR products in the future.”
A number of other mainstream loan providers have very similar deals on offer, such as Barclays Initial card, which entitles low credit ratings to access a credit card at a rate of 34.9%, and Capital One who last month released their Classic Preferred card that has the same APR has Tescoís latest offering.
Vanquis Bank also has a similar deal on with its Aquis card on offer at a rate of 29.8%, and it is worth looking round the market if you fall into the category of a poor credit rating holder in order to find the best card to bolster your prospects in the future.
Once the card has been acquired, taking on direct debits would be an advisable course of action, because making payments on time at the same point each month over a long period will have a significant impact on a card holderís credit rating.
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