A new credit card to use abroad

Sainsbury's has launched a new credit card which could be perfect for regular travellers. There's just one snag...

It looks like the credit card market is hotting up after Sainsbury’s launched a brand new credit card which it claims will shake-up the credit card market.

The Sainsbury’s Gold Credit Card is said to be unique due to its range of attractive benefits for those of us who like to travel, as well as those of us at home - particularly anyone who regularly shops in Sainsbury’s.

However, the major catch to this credit card is that you’ll have to pay a £5 monthly fee – equating to £60 a year.

So is this card really worth it?

The benefits

Let’s start by looking at the benefits of owning the Sainsbury’s Gold Credit Card in more detail.

1. Low interest rate

Firstly, it offers a relatively low rate of interest on purchases and balance transfers at 9.94%. Admittedly, this is by no means the most competitive rate in the world, given you can choose from an array of credit cards that charge no interest at all on balance transfers and purchases for a year or more. 

However, the rate does then jump up, typically to around 16% APR. If you don’t want the hassle of worrying about when the interest-free period will come to an end, you may prefer this card as you'll  have a lower for the lifetime of the debt. What’s more, there’s no balance transfer fee to deal with – these usually cost around 3% of the outstanding balance.

2. Travel insurance

Another advantage of the Sainsbury’s Gold Credit Card is that it offers worldwide annual family travel insurance. This provides cover for two adults up to the age of 65 and up to six children under 16 (or 23 if they’re full time students). Winter sports cover will also be included.

Sainsbury’s says this is worth up to approximately £250 a year. So if you’re a family who likes to travel, this is a pretty great benefit.

3. Fewer fees

If you are a keen jet-setter, the benefits abroad don’t end there. The Sainsbury’s Gold Credit Card is also a brilliant piece of plastic to have in your wallet if you’re planning to do a spot of shopping overseas. That’s because, unlike 98% of cards, it won’t charge you a foreign exchange fee for spending abroad.

Not only that, but the Sainsbury’s Gold Credit Card doesn’t even charge a fee for withdrawing money from the ATM – whether you’re abroad or at home. It also won’t charge interest on the amount withdrawn, providing you’ve paid off the balance in full before the end of the month. (Just make sure you do this, otherwise you’ll be hit with an interest rate of 24.93%. Ouch!)

Bearing in mind that the majority of credit cards will charge you a fee of 3% for cash withdrawals (with a typical minimum charge of £2 to £3) as well as an eye-popping rate of interest (often as high as 30-35%), this is a pretty impressive.

4. Double the points

If you regularly shop in Sainsbury’s, there’s another reason you might like the Sainsbury’s Gold Credit Card.

Every time you use the card in conjunction with your Nectar card to make a purchase in a Sainsbury’s store, on the Sainsbury’s website or at a Sainsbury’s petrol pump, you’ll earn double Nectar points – so you’ll earn two points for every £1 you spend.

You’ll also earn one point for every £5 you spend on the Sainsbury's Gold credit card anywhere in the world.

You can find out what you can spend your Nectar points on here.

The drawbacks

As with everything in life, there’s a catch to the Sainsbury’s Gold Credit Card.

If you decide to apply for the card, you’ll have to pay a £5 monthly fee. Taking this monthly fee into account, the Sainsbury’s Gold Credit Card offers a typical APR of 18%. The average typical APR for credit cards is 18.8%, according to Moneyfacts.

Of course, charging a fee for a credit card certainly isn’t unheard of these days. The Egg Money MasterCard, for example, charges £1 per month in return for 1% cashback. And the Capital One Bank World MasterCard also offers 1% cashback providing you pay £18 a year.

Sainsbury’s reckons that the £5 monthly fee is worth it because the benefits of the card mean you could easily save more than £300 a year. However, personally, I think this ultimately depends on how you use your credit card. After all, if you rarely travel abroad, or you don’t have a family to take full advantage of the travel insurance policy, the savings will be far smaller.

It's also important that you check the terms and conditions of the travel insurance policy carefully if you are considering taking out the Sainsbury’s Gold Credit Card, to ensure you know exactly what you’ll be covered for. It’s a good idea to do a little research of your own to see whether you can actually get a better deal on travel insurance elsewhere before you sign on the dotted line. You can easily do this with the lovemoney.com travel insurance comparison centre.

And finally, if you absolutely hate shopping in Sainsbury’s and you've vowed you'll never step foot inside the store again, this credit card really may not be for you!

The verdict

So what’s my verdict? Well, I’m going to sit on the fence a little here because ultimately it’s all about personal preference.

If you’re a regular traveller, I think the Sainsbury’s Gold Credit Card is definitely worth considering - particularly if you have a family. After all, you won’t have to worry about spending on your card abroad and you’ll get your travel insurance thrown in as well! What’s more, if you do regularly do your food shop in Sainsbury’s, earning double Nectar points could be a reward well worth having.

However, if you don’t regularly jet off overseas, I’m not convinced that the £5 monthly fee is worth it. As a result, you may want to choose a different credit card.

The alternatives

If you’re after a balance transfer credit card, your best bet is to plump for a card that has an interest-free period. For example, the Barclaycard Platinum 16 Month BT credit card offers a market-leading 16 months interest-free on all balance transfers. So you won’t have to worry about paying any interest for over a year. But on the downside, you will have to pay a 2.9% transfer fee.

Meanwhile, if you’re after a new purchases credit card, the Tesco Bank Clubcard Credit Card offers a market-leading 13 months interest-free. So you can spend until your heart’s content for that 13 month period, without concerning yourself about the interest.

Just remember to pay off the balance in full before any promotional interest-free period comes to an end to avoid being hit with a high interest rate.

Alternatively, if you’re looking to do some serious spending or you have a hefty balance transfer that’s likely to take you a long time to pay off, you may prefer to opt for a low rate credit card, such as the Barclaycard Platinum Simplicity Visa which offers a low rate of 6.8% for life! There’s also no balance transfer fee.

Finally, if you’re highly disciplined at paying off your credit card bill in full each month, you may prefer to get rewarded for your spending. In which case, it’s well worth looking at reward and cashback credit cards.

If you simply want to earn some money back, for example, the American Express Platinum Cashback Credit Card offers 5% cashback for the first three months, and up to 1.25% after that – and there’s no monthly or annual fee!

You can find out more about reward cards in The top six reward cards.

More: Something you need to know about your credit card | Win rewards for spending interest-free