Asda launches 2% cashback credit card, but is it any good?
Asda has launched a new cashback credit card, paying up to 2% interest on certain spending, though people considering the card will need to decide if it’s worth the £3 monthly fee.
The new Cashback Plus card pays 2% cashback in Asda vouchers on shopping in Asda, including fuel, online and George, Asda’s clothing range. Purchases made in other retailers will earn a 1% reward.
The Cashback Plus Card also offers 0% balance transfers for 15 months, and six months’ 0% interest on purchases from George.com, providing you spend an initial £200.
Asda already offers a fee-free Cashback Credit Card, which rewards Asda shopping with a 1% bonus, and 0.5% on rewards spent elsewhere. This isn’t changing.
Asda’s Cashback card has a 19.9% APR representative, while the Cashback Card Plus is 26.2% APR representative, including the monthly fees.
Someone who only uses the card in Asda will need to spend at least £300 each month before the cashback earned outweighs the £3 monthly fee - if you spend less than £300, you'd be better off with the fee-free card.
Also, despite the name, Asda’s cashback cards are arguably more like a loyalty scheme, as members are paid Asda vouchers instead of cold hard cash when they come to collect their reward.
There's an introductory offer of 5% cashback on spending up to £2,500 over the first three months. After which, cardholders will earn 1% cashback on spending up to £10,000 and 1.25% on any further spending. There's a £25 annual fee.
If you spend £3,000 over the course of a year you'll earn £35 after fees are deducted. The APR representative is 28.2% including the fee. You’ll need to bear in mind that American Express is less widely accepted than Visa or MasterCard.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.