Credit card launched by BT

Telecommunications giant British Telecom has branched out by launching its own credit card, which is designed to give customers the chance to save money on the cost of their telephone bills and broadband through spending on the card.

By spending on the credit card customers can make savings on the cost of their bills. However, experts are warning customers the avoid the perils of false economy, as the savings will be small and therefore repayments must be made in full in order to gain any benefit from the card.

For every £2 spent on the card up to a total of £250 BT will deduct one penny from telephone or broadband bills. Once over the £250 limit, one penny will be shaved off bills for every £1 spent on the card. For those spending £250 per month on the credit card and repaying it in full each month the savings will amount to just £1.25. However, those failing to repay the balance in full will be charged three pence in interest for every £2 unpaid, and therefore will gain no benefit at all from the card.

There are, however, other benefits to the card, such as 0% interest on balance transfers for a year, and 0% interest on purchases for three months.

One industry professional stated: 'This is an innovative move by BT and takes the 'bundling' of services to a whole new level. It is quite rare to find any reward scheme operating on a card with 0% balance transfers. This is a strong indication that BT's pushing the boat out to retain its existing customers.'

She added:  'One of its best features is that if more than one BT credit card holder lives at the same address, they can all earn a discount off their shared bill. As with all credit cards, unless you pay off your balance every month, once the three-month 0% offer on new purchases expires, you'd be better off cutting up the card or retiring it to the drawer. One other thing to beware of is that, because this card is run by MBNA, customers cannot transfer balances from another MBNA account.'

Tom Smith
5th July 2007