Football finance may have hidden penalties

Loans with a crippling rate of interest will hit football supporters hard.

Football fans are more likely to spend the summer discussing by how much their season tickets have gone up than any big-name signings at their club.

Football fans are more likely to spend the summer discussing by how much their season tickets have gone up than any big-name signings at their club.

As the cost of supporting a team rockets, clubs are offering a range of personal loans and credit cards to ease the burden - even though interest rates are higher than you get if you shop around.

Not surprisingly, banks and financial institutions are keen to offer these affinity products. They believe that loyal football supporters are as likely to switch from their Liverpool credit card - to Barclaycard, for example - as they are to start supporting Everton.

The range of football finance products available is increasing. Friends Provident recently started selling a range of financial products, including mortgages, to Southampton Football Club supporters.

And from Saturday, Birmingham City supporters can get health insurance from Legal & General Healthcare's Essentials Cash plan. Monthly premiums start at £11.50 for Level 1 cover for a single person, covering eye tests, dental inspections and treatment up to £50, half of all costs on specialist X-rays up to a maximum of £100 and a range of other treatments. Higher premiums are charged for those requiring more cover.

Legal & General also offers a deposit account to Birmingham City supporters and is in talks with other premiership clubs regarding affinity products. Despite criticism that football finance products are among some of the most uncompetitive, Legal & General believes supporters will only opt for the best deals.

"Gone are the days when you can offer high-cost products because it has someone else's brand on," says Mike Smith, business communications manager at Legal & General. "You've got to be able to demonstrate that it is a low-cost, good-value product. I do think there is a market there but you have to demonstrate that you are offering [fans] market-leading rates."

Given the growth in football finance, the Government's football taskforce is looking at whether such products are good value for money. Personal loans, which are offered to pay for season tickets, have some of the worst rates on the market. Most are offered by a limited number of companies; HFC, for example, offers loans to fans of Arsenal, Aston Villa, Barnsley, Everton, Leicester and Manchester City, paying commission to the clubs for every loan taken out.

Coventry City, Glasgow Rangers and Queens Park Rangers have some of the highest charges, stinging fans with annual percentage rates (APRs) of 29.8 per cent, 29.3 per cent and 29 per cent. West Ham and Arsenal aren't much better, charging 24.6 per cent and 22.4 per cent. Manchester United and Liverpool don't offer loans as they reckon fans can find better value for money elsewhere.

Not all loans are uncompetitive. Newcastle United fans can get an attractive 8.8 per cent from Northern Rock. Other supporters are better off getting a loan elsewhere; First Direct charges 12.9 per cent on loans of £1,000 or more.

Savings accounts vary widely in value (see table), although none are as uncompetitive as those offered by high-street banks. Bristol City supporters can get a pretty good 5 per cent on balances of £1.

However, football credit cards all tend to be uncompetitive, with rates ranging from 19.2 per cent at Aston Villa to 24.6 per cent at West Ham.

A better deal would be the Capital One Football Card which has an introductory rate of 3.9 per cent for six months, before reverting to 12.9 per cent.