Sainsbury’s launches two low rate reward credit cards
The supermarket giant has added a reward and cashback credit card to its range, both of which come with a very low APR. But how do they compare?
Who says cashback and rewards have to come with a premium?
Sainsbury’s has launched two credit cards that both come with a low rate of 7.8% APR on purchases and balance transfers as well as added perks.
One is a typical reward card that allows you to earn Nectar points, while the other is a cashback credit card which gives you money back when you shop.
The two new additions will replace the Sainsbury's Low Rate Credit Card from the 25th of April.
So let’s take a look at what’s on offer and how these two cards stack up.
Low rate with rewards
First up is the Sainsbury’s Bank Low Rate Nectar Credit Card.
You can collect ten points per £1 spent in Sainsbury’s during the first three months on a maximum spend of £1,000 each month. So you could earn 10,000 Nectar points each month, which equates to about £150 overall. During the introductory period you can earn eight points per £1 spent on Sainsbury’s fuel.
Once the initial period is over you can earn four points for every £1 spent in Sainsbury’s as well as two points per £1 spent on Sainsbury’s fuel.
Elsewhere you can earn one point per £5 spent outside of Sainsbury’s.
If you're a big lover of the Nectar reward scheme and shopping at Sainsbury's won't be an inconvenience, then this card could be right for you.
But what else is out there?
How it compares
The Sainsbury’s Bank Low Rate Nectar Credit Card isn’t the only way you can collect Nectar points.
Nectar has also teamed up with American Express to offer the American Express Nectar Credit Card. With this card you get 10,000 Nectar points if you spend £1,000 in the first three months - so only a potential £50 on offer. But the card can earn points at a wider variety of Nectar sponsors like BP and Homebase so you’re not as limited as you are with the Sainsbury’s card. You can earn four Nectar points per £1 spent at Nectar supporters and two Nectar points per £1 spent elsewhere.
Although you have more opportunity to earn you will have to put up with a pretty hefty APR of 25% - that’s 17.2% more expensive than the new Sainsbury card. The American Express Nectar Credit Card card also comes with a £25 annual fee.
You can earn exactly the same Nectar points as the Sainsbury’s Bank Low Rate Nectar Credit Card with the Sainsbury’s Bank Nectar Credit Card, but with the added bonus of 15 months interest free on balance transfers (for a 3% fee) as well as six months interest free on purchases. So you can shop interest free for a few months, but after the introductory offers fall away you will face an APR of 17.9% which is 10.1% more than the low rate option from Sainsbury’s.
If you’re not a fan of the Nectar reward scheme there are plenty of others you could try. Avios allows you to earn points which can help you get money off travel and Your Points is a scheme from NatWest and RBS that offers a range of high street rewards. But the top contender in the supermarket arena is the Tesco Clubcard scheme.
The Tesco Clubcard Credit Card for Balance Transfers and the Tesco Clubcard Credit Card for Purchases offers five points for every £4 spend in Tesco stores and on Tesco fuel. Elsewhere you can pick up one Clubcard point per £4 spend. Instead of a temporary introductory offer Tesco has a consistent deal on Clubcard points, but it has a much higher APR of 16.9%, meaning you'll ben punished more if you don't manage to clear your balance each month once the 0% periods end.
For more read: The best reward credit cards.
Low rate with cashback
Next up is the Sainsbury’s Low Rate Cashback Credit Card.
This card pays 5% cashback on Sainsbury’s shopping for the first three months on spends of up to £1,000 per month. That’s a potential £150 you could amass from just doing your normal shopping.
Thereafter cardholders will get £5 cashback each month they spend at least £250 at a Sainsbury’s store and at least £250 elsewhere, which is the equivalent to 1% cashback on the total spend.
The standout value of the card though is that there is no annual fee and the APR on purchases is very low at 7.8%. This is in contrast to quite a few of the leading cashback credit cards.
How it compares
The Santander 123 Credit Card for example offers cashback of up to 3% on supermarket, department store and travel spending. But an annual fee of £24 applies if you are not an existing 123 current account holder and a punishing 22.8% APR awaits you if you don’t clear your balance each month.
Elsewhere the Capital One Aspire Elite pays 5% cashback each month for three months on all purchases with the potential to earn up to a maximum of £200, which is £50 more than what Sainsbury’s can offer. Thereafter you can earn tiered levels of cashback up to 2% depending on how much you spend. But this card really is only the reserve of the elite as not only does it come with an annual fee of £120 and an APR of 19.9%, you will also need an income of £50,000 a year to apply.
Then there's the American Express Platinum Cashback Card. With this card you can also earn 5% in the first three months but this time it is capped at £100 - so £50 less than Sainsbury’s and £100 less than the Capital One card. Once the introductory offer ends card holders can earn 1.25%. You also get a 2.5% anniversary cashback rate in your anniversary month as long as you have spent £10,000. But you have to pay an annual fee of £25 and have to suffer an APR of 18.7% if things don't quite go to plan.
One of the only top cashback credit cards to not charge a fee is the Sainsbury Cashback Credit card. It comes with the same cashback deal as the low rate version but with 15 months interest free balance transfers (for a 3% fee) as well as six months interest free purchases. The only downside on this card though is that it has an APR of 17.9%, which you could suffer if you can't pay back your balance in full each month.
For more read: The best cashback credit cards.
Why they matter
You don’t often find such a low standard rate of interest on both balance transfer and purchases combined with an attractive reward scheme.
In fact most cards charge nearly 10% more than Sainsbury’s new offerings.
On new purchases a low rate means you won't get shocking levels of interest applied but you might be better off with an interest-free purchase card instead. Likewise with balance transfers you will get charged a manageable rate of interest and no fee with a low rate card but there are better interest-free balance transfer cards out there if this is something you want to focus on.
The two new low rate options are great if you can’t guarantee you will be able to pay off the full balance from month to month as other reward cards can be quite punishing.
However to get the maximum benefit of any reward based credit card you should aim to pay off the balances each month.
More on credit cards:
The best cashback credit cards
The best 0% purchase credit cards
The best money transfer credit cards
Comments
Be the first to comment
Do you want to comment on this article? You need to be signed in for this feature