First 0% cash advance card celebrates Metro's first birthday

METRO Bank - the UK's first new bank in 100 years, this time last year - is celebrating its birthday with a new credit card.

We usually go with a cake.

The newly minted Metro credit card offers 12 months 0% on purchases, balance transfers and, uniquely, cash advance transactions.

The balance transfer/purchase deal puts the card a few months short of the current market-leading offer of 0% on both for 17 months - a deal being offered by Barclaycard.

But it's the 0% offer on cash advances that's really intriguing: quite simply, it's unheard of for a credit card to offer a deal like this.

Credit cards and cash withdrawals don't mix in any ordinary circumstances. Interest rates are high, interest free periods are rarely extended as they are for purchases and there are often fees to pay too.

The closest most credit cards ever come to a 0% rate on borrowing cash taken from an ATM is with a super balance transfer deal, an offer which allows cardholders to transfer borrowing to a current account.

Even that service comes with a fee on the amount transferred, though.

However, Vernon W. Hill II, the billionaire US bank owner who founded Metro Bank said today that he wasn't concerned with rates.

Metro has, "promised a Banking Revolution and has delivered a new model based on service and convenience, not product and price" he said.

Responsible lending?

More on the service in a minute, though, as we dawdle a little longer in the old, product based regime to have a look at the Bank's new credit card.

The card also impresses with a 13% APR once the 0% deals run out, well below the rates of most similar credit cards.

And the interest rate isn't subject to risk-based re-pricing: what you see is what you get.

However, even with a fairly low rate after the 0% period is over is it really responsible for Metro to promote cash withdrawals using a credit card?

Making a withdrawal from an ATM is somewhat symbolic of 'free banking': it's a service that we would expect to cost nothing on the part of our banks and only be expensive through an additional provider, such as a credit card issuer.

If Metro's deal led to the assumption that all cash withdrawals will be free in the future that could obviously be a problem for consumers.

However, it's not clear that's the case.

In addition, it's an easy way to access a lot of money. In the case of credit cards that's borrowed money with all the interest rates and fees that implies.

Service with a smile

Having said that, however, if the Metro card deal gives you the feeling that they're not your average credit card provider, you'd be right.

Metro Bank swooped in to fill Brits' gap in goodwill towards the high street banks.

And, so far, it seems to be doing a pretty good job of it.

It operates in retail hours (8am - 8pm Monday to Friday, 8am - 6pm Saturday and 11am - 5pm Sunday and bank holidays - why don't banks do this already?).

In addition, opening a current account is instant, new account holders can leave with a debit card straight away if they're accepted, and those debit cards are free to use worldwide.

That approach has allowed the bank to open 8 stores, with 12 more planned in the near future, and gain over 100 new customers a day.

However, thus far the bank hasn't made an impression on the high street bank's hundreds of branches nationwide and has limited its operations to the London area. Current account and credit cardholders will need to go into their local branch (or 'store' in Metro bank parlance) to open an account.