The sharp rise in the cost of living over the last few years has driven a huge increase in credit card usage.
Borrowing to meet basic needs and expenses is dangerous, particularly on credit cards with high interest rates. However, our plastic friends can be a useful money-saving tool if you use them wisely. They can help you to budget, protect you against problems and spread the cost of purchases over time.
They can also improve your credit rating, by providing evidence that you are the kind of person who can borrow money and pay it back on time.
Saying this, the credit card market can feel like a bit of a jungle! From providers hiking limits without asking to slapping the highest interest rates on the worst off consumers, they don’t exactly scream ethics. Many will also have concerns about choosing a card from a big bank where lending practices are questionable.
In this difficult market, here are two of the more ethical cards to consider.
Nationwide credit card
Nationwide is the UK’s biggest building society. Its mutual status means that, unlike a bank, it is not listed on the stock market and accountable to shareholders. Instead, it is accountable to its members – ie. the people who bank with it – and they have a say in how it is run.
The society changed its terms and conditions in 2016 to rule out automatic increases in credit limits, and doesn’t remove promotional deals if a user misses a payment.
Nationwide’s credit card comes with worldwide commission-free purchases and no annual fee.
Introductory offers: The card comes with two offers; 0 per cent interest for 18 months on balance transfers and 0 per cent on purchases for three months; or 0 per cent interest on balance transfers for 15 months and 0 per cent on purchases for 15 months. A 1.5 per cent balance transfer fee applies for the first 90 days, after that it’s 2.4 per cent (with a minimum charge of £5). You must be a Nationwide current account holder to apply for its credit card.
Interest rate: 24.9 per cent.
Top 7 ethical current accounts
Co-operative members credit card
With 1p back for every £2 you spend in the Co-op food stores and 1p for every £3.33 spent everywhere else with a Visa symbol, this fee-free card (only available to Co-operative members) offers rewards and incentivises you to shop with the mutual, which has ethical sourcing policies.
While the Co-operative Bank doesn’t have a squeaky clean ethical scorecard – in 2017 it had to be rescued by international hedge funds – it is in the midst of a takeover by Coventry Building Society, a certified B Corp.
The Co-operative credit card has a 2.75 per cent fee for purchases abroad.
Introductory offers: None, although there are also no balance transfer fees. Bear in mind that you cannot transfer a balance from another Co-operative or Smile credit card.
Interest rate: 18.2 per cent.
Monzo Flex Purchase Credit Card
Monzo’s FlexPlus credit card aims to make borrowing more transparent, with clear terms and no hidden fees. You can spread the cost of purchases over time, with 0 per cent interest for three months on purchases of £100 or more. After that, interest applies at a representative 29 per cent APR (variable) – so it’s worth planning repayments carefully.
The card also offers no foreign transaction fees, instant spending updates and Section 75 protection on eligible purchases, helping you stay in control whether you’re spending at home or abroad.
Introductory offers: None, in favour of clear terms and no hidden fees.
Interest rate: 0 per cent for three months, then 29 per cent APR (variable)
For your complete guide to the best ethical and sustainable investment funds available to UK investors, see the latest full Good Investment Review, produced in partnership with Square Mile Research and The Big Exchange.
