When Tesco Personal Finance aggressively entered the credit card market in May with a Visa card offering an initial APR of 4.9 per cent, it seemed as if a long-awaited credit card war had finally begun.

But APRs across the board have remained stubbornly high despite the supermarket group's bold move - until now. Ulster Bank has gone one better than Tesco by introducing a balance transfer and cash purchases rate of 3.9 per cent until July 2001. The rate will move to 17.9 per cent from then on.

MBNA and AIB also offer an introductory APR for balances transferred from other store or credit cards but it's considerably higher at 6.9 per cent and does not apply to purchases.

The Tesco introductory rate applies to purchases and balance transfers from another credit card until January 1st 2001, when the card moves to a standard rate of 15.9 per cent APR, by far the lowest on the market.

Tusa, the joint venture banking operation between Superquinn and TSB currently has the next lowest APR of 17.5 per cent, closely followed by Ulster Bank, which has just reduced rates to 17.9 per cent.

AIB, TSB, EBS and MBNA charge 18.9 per cent. The highest annual percentage rate is levied by Bank of Ireland which charges 19.3 per cent. The Bank had offered an 18.9 per cent rate, but increased it in May of this year. AIB and Bank of Ireland share about 70 per cent of the credit card market. Market penetration for credit cards in the Republic is 22 per cent, compared to 44 per cent in the UK. Approximately one million credit card accounts are active in the State and the average annual plastic spend is £2,662 (€3,380).

There is a lot of plastic choice with many people qualifying for affinity or group scheme cards that offer preferential rates.

But there is much more to consider than the quoted APR when deciding which credit card is best for you.

Amazingly, more than half of the State's credit card users clear their balance every month. It would be pointless for any of them to have the low interest Mastercard from AIB (12.5 per cent APR), Bank of Ireland's Advantage card or any other low interest card which charges interest from the date of the transaction. Because of the 56-day interest-free period offered by most standard cards, those who clear their balances monthly do not pay any interest. Another factor to consider is the cash advance or withdrawal fee. Those who travel abroad frequently should be aware of how much it costs to withdraw money or make transactions both inside and outside the euro zone.

TSB and Tusa come out well on this score, with no conversion charge on transactions abroad.

Ulster Bank charges an administrative fee of 2 per cent on all transactions outside the EMU and 1.75 per cent within it.

If you tend to be undisciplined in your finances look out for late payment fees or "overlimit" fees. Tesco, MBNA and Ulster Bank apply these charges. Unfortunately and unfairly, card holders pay interest on charges. Most cards treat charges as purchases for interest purposes. All cards are subject to a £15 annual Government levy. Most offer a second card free on the same account and have some form of travel accident insurance included.

There is no doubt that credit cards as a payment method are extremely convenient. Cardholders have 24-hour access to goods, services and cash and up to eight weeks of interest-free credit. For those who incur interest, the amount paid will depend on their repayment behaviour. The cost of using plastic can range from zero (discounting the Government duty) to several hundred pounds a year. With the rapid development of e-commerce, payment by credit card will become even more firmly rooted in consumer financial culture.

Credit cards first became available in the Irish market in the late 1970s and we have traditionally been charged among the highest APR in the European Union. Ulster Bank's move this week is a clear signal the market is now being shaken up and this welcome development can only lead to lower rates all round.