Credit cards are not just the preserve of big banks - all the teacher unions have them too. Stephen Swain reviews what's on offer.
The recent brouhaha over the Consumers' Association and its newly-launched credit card has thrust so-called affinity cards into the spotlight. (For those who find the business pages make the best papier mache, the association's card was voted best buy by Which?, the association's own magazine.) Affinity cards, which often offer a more competitive interest rate than the big players such as Barclaycard, can be one way to reduce out-goings. All of the main teacher unions promote at least one.
The largest, the National Union of Teachers, offers a version of the Unity Trust MasterCard, the TUC-sponsored card launched in the summer of 1990 which has been taken up by 37 unions - and which has a potential market of six million union members.
It is free for the first year, and stays that way as long as the card is used 10 times or more annually - hardly an onerous task for most holders. It also has a 50-day interest-free period before all or part of the loan must be repaid, which is fairly standard in the industry, although some of the newer, aggressively-marketed American cards have a much shorter period in return for a lower annual percentage rate (APR) of interest.
The NUT card's APR is 20.5 per cent - Barclaycard's current APR is 22. 3 per cent, with an annual fee of Pounds 10.
This compares to the split figure charged by the college lecturers' union, NATFHE, for its Unity First MasterCard. The first year is free, but it must then be used at least 10 times to avoid an annual Pounds 12 fee. The current APR is 18.5 per cent for those who pay no fee, and 19.4 per cent for fee-payers.
NATFHE members also enjoy a slightly more generous 56-day interest-free period. A union spokesman said the cards were offered simply as a service to members - the union gained no commission.
However, the 150,000-strong Association of Teachers and Lecturers, or more particularly its benevolent fund, does benefit when a card is taken out and every time it is used.
Fee-free for the first year, the ATL MasterCard costs Pounds 7.50 thereafter, unless it is used for purchases of Pounds 2,000 or more each year. The benevolent fund receives Pounds 5 each time a card is issued, and a further Pounds 5 if the card is still in use 20 months later.
The National Association of Schoolmasters Union of Women Teachers offers a choice of cards to its members, Visa through the Co-operative Bank - which also offers personal loans to members - and a TUC-sponsored MasterCard from the Unity Trust Bank.
The NASUWT Visa card is fee-free if used 10 times a year, and has a dual interest-free period - 15 days from the statement date for those who pay in full, and 25 days for part-payers. The APR is also split - 19.5 per cent for those paying by direct debit, and 21.7 per cent for the rest.
The NASUWT's TUC card carries a Pounds 7.50 fee unless used at least 10 times annually, a 50-day interest-free period, and an 18.5 per cent APR.
It also offers free purchase care insurance for 100 days, and a free extra card for spouses.
Members of the Professional Association of Teachers can apply for a no-fee Visa card run by the Beneficial Bank, with an APR currently at 14.9 per cent for the first six months, then 19.5 per cent. The interest-free period is up to eight weeks and free extra cards are available for spouses.
Other benefits include travel and wine clubs. Members who use their cards to book holidays are also eligible for up to Pounds 75,000-worth of travel accident insurance.
Unions are not alone in offering cards - but few schools do so. The first was launched by the Shrewsbury School Foundation a year ago, with the Beneficial Bank, mainly to enable parents to pay school fees.
Janet Waters, for the foundation, says 10 per cent of present or past pupils and staff on the foundation's database had applied for the card, which began with an introductory 14.9 per cent APR.
`HISTORIC PEAK' IN CARD OWNERSHIP
Forty per cent of adults in Britain have a credit or debit card - an historic peak, says the Association for Payment Clearing Services. And they use their cards to spend more than Pounds 1 billion a week, according to the Credit Card Research Group. Almost half the bills are paid in full each month and up to 75 per cent of holders clear their accounts more often than they carry over part of their bill to the following month. Of those who use the cards for borrowing, rather than as a payment facility, only 4 per cent risk straying into the permanent red zone by borrowing more than nine-tenths of their credit limit.