New 10% cashback credit card!

Egg's new credit card offers a whopping 10% cashback, but is this deal as great as it seems?

We all know it makes great financial sense to get rewarded for your credit card spending. And, as long as you pay your bill in full every month, that’s exactly what you’ll get with a rewards credit card.

If you like to earn rewards on purchases made using your flexible friend, you’ll probably want to know about a new kid on the block - it’s the Egg Visa Card which offers a whopping cashback rate of 10%.

This card is a bit of a hybrid since it’s essentially a rewards credit card, but instead of offering loyalty points it provides cashback instead. But it isn’t the same as a cashback credit card since you can only use it at certain retailers, online, to make a saving.

What does Egg’s new card have to offer?

Typically, you’ll get 10% cashback on purchases made at over 1,500 major retailers including supermarkets, high street retailers, hotels and travel agents to name just a few. Purchases must be made through the new online Egg Cash Back Superstore which is powered by Quidco, one of the UK’s leading cashback websites.

The 10% rate is calculated as the mean of all the discounts currently available at Quidco divided by 1,500. So, the rate could rise or fall depending on the deals available at any given time.

Existing Egg card holders can also sign up to use the Cash Back Superstore as well as new customers. And if you’re new to Egg you can also take advantage of a 0% deal on purchases until 1 September 2010. (The card offers 0% on balance transfers until 1 August 2011 with a 3% transfer fee - but you should steer clear so you don’t fall foul of negative order of payment).

There’s no annual fee and cardholders will benefit from purchase protection and internet delivery guarantee cover which are both provided as standard.

Purchase protection provides cover for 90 days from the date of purchase if items are stolen or accidentally damaged.

Meanwhile, internet delivery guarantee cover insures against theft or loss before you receive items bought online.

How does the Egg Cash Back Superstore work?

If you have ever used Quidco before - or any other cashback website - you’ll see the Egg Cash Back Superstore works in much the same time. You simply search the range of discounts on offer until you find one which matches the purchase you want to make. Then simply click through to the appropriate retailer’s website to buy the item online.

You’ll earn cashback at the rate advertised for each individual retailer. The Superstore will keep track of the amount of cashback you  have accrued, so you’ll always know exactly how much you have earned. Then each month the cash is paid into your bank account for you to spend as you wish.

Is it any good?

On closer inspection the Egg Cash Back Superstore looks remarkably similar to Quidco’s own cashback website. Surely Egg isn't offering you a credit card to get cashback on your shopping, when you can simply use any old credit card (or debit card) on Quidco and earn the same cashback rates?

Unfortunately, it looks that way. I asked Egg if cardholders will benefit from better rates by purchasing items via the Egg Superstore rather than through Quidco's own website. Almost all of the offers on Quidco and the Egg Superstore are exactly the same (with the exception of some financial firms which partner with Quidco, but not Egg). But there are also a handful exclusively available to Egg customers every month which you can't get at Quidco. Here’s a summary of deals available in June:

Amazing, aren't they?

It's shocking when you consider that, apart from this handful of niche discounts, the only difference is that Egg cardholders will retain 100% of the cashback they earn at the Egg Superstore, while Quidco keeps the first £5 you earn each year if you use their site directly.

Even so, applying for a credit card and getting through a credit check seems quite a lot of hassle to save £5 a year, especially when you consider that there are other cashback websites which are totally free to use, such as Topcashback and Cashbackkings - although, it’s fair to say the cashback deals from these sites may not be quite as good as those available at Quidco.

Whatever you decide, a word of warning: saving that £5 certainly won't be worth it if you end up racking up hundreds of pounds in interest on the debts you run up on the Egg Cash Back card. So make sure you pay off your bill in full if you are planning to use this card.

How does the Egg card compare to other reward cards?

If you compare the Egg card with other rewards cards, it looks pretty competitive. After all, there's not many rewards schemes which can boast 1,500 retail partners. And it’s certainly an advantage to be rewarded with cash which can be spent wherever you like, rather than having loyalty points which can only be redeemed at certain places. But, like all rewards cards, it's only worth it if the retailers available at the Egg Superstore are places where you would normally shop, and you are happy to shop online.

But, having said all this, if you want to earn as much cashback as you possibly can, there are cards out there which can help you earn even higher rates.

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A better way to get cashback

Although Egg’s 10% rate looks attractive, if you want to maximise the cashback you earn, I think you’ll do better to buy directly from a cashback website using a genuine cashback credit card instead of using Egg’s hybrid. That way you’ll bump up the amount of cashback you earn in total.

For example, if you used the American Express Platinum Cashback card instead, not only would you benefit from cashback on your purchases made via a cashback website, but you’ll also earn extra cashback by spending on the card itself. With the Amex card that’s 5% for the first three months (up to a maximum of £100) with rates of up to 1.5% after that.

Plus you can use it when you're shopping on the high street or in restaurants, rather than only on the internet. So you're not just tied to the Egg Superstore and the retailers Quidco has affiliate links with. You also get purchase protection with this card.

But, bear in mind, it's not accepted everywhere and you’ll only earn cashback on the discounted price of the items you buy - that is once the cashback has been deducted from the original price. 

Again you'll need to pay off your bill in full other you'll end up forking out much more in interest than you earn in cashback. 

To find out the best way of stepping up your cashback, take a look at Cut the cost of your Xmas shopping - the principles apply all year round!

A better way to shop interest-free

If what appeals to you about the Egg card is the interest-free period on purchases, then again, you're better off going for a different card. For example, both Tesco and Sainsbury's are offering credit cards which allow you 12 months at 0% on purchases.

With these cards, you can shop through Quidco to get cashback (so enjoy the vast majority of the discounts on offer from the Egg card) and then pay nothing in interest on all your purchases for a year.

You can also use it when you're out and about, and because these cards are powered by Mastercard, they'll be accepted a lot more frequently than American Express. And instead of paying off your bill in full each month, you could stick the money in a savings account and earn interest by stoozing! Find out more by reading The ultimate guide to stoozing.

Compare credit cards at lovemoney.com

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