The new Capital One Aspire World credit card offers cashback of up to 1.25% and no fees for shopping overseas.
Credit cards are double-edged swords.
Used carelessly, they are an expensive way to borrow money, especially when withdrawing cash. However, when used wisely by customers who always pay off their monthly bills in full, they offer enticing rewards. These perks and freebies often include cashback, loyalty points and free insurance.
Unlimited cashback of up to 1.25%
For me, the best plastic perk by miles is cashback, because cash is the easiest and most convenient reward to spend. Last year, I got over £81 in 'free' cash simply by putting all my everyday purchases on my 1% cashback credit card.
However, this market is heating up, because Capital One has launched a new cashback credit card. The Capital One Aspire World card offers up to 1.25% cashback on all UK purchases. In addition, this card charges no foreign-currency fees on overseas transactions, while other card issuers charge between 2.75% and 2.99% for this service.
Let's look at what's on offer from this new card, before comparing it with rival cards:
|
|
Capital One Aspire World card |
|
Card type |
MasterCard |
|
Foreign-exchange fee |
0% |
|
Cashback on UK purchases |
0.5% on up to £5,999.99 a year 1% from £6,000 to £9,999.99 a year 1.25% on £10,000+ a year |
|
Typical interest rate for purchases |
19.9% APR |
|
Other benefits |
Free Identity Alert service provided by Equifax, providing an early-warning service against identity theft |
Note that this card is aimed at customers with excellent credit ratings and is available only for a limited time. So you should apply for this card only if you have a great track record as a sensible borrower.
Only a handful of credit cards don't charge additional fees for overseas spending, so this is a big plus for the Capital One Aspire World card. Likewise, cashback on UK purchases is a big plus for those cardholders who avoid interest by always paying off their bills in full each month.
However, in common with almost all other credit cards, this card does charge fees and interest on cash withdrawals, both at home and abroad. That's why it's best kept out of cash machines.
The best credit cards for cashback
With the summer season now on the way, this looks like a cracking card for spending at home and abroad. However, how does it stack up against the best of the rest? This table shows the cashback payable on monthly spending of £250 (£3,000 a year) in the first year of use:
|
Card |
Cashback |
Yearly fee |
Net gain |
|
Barclaycard High 5 Cashback Visa (Up to 6% for three months, then up to 2%) |
£90 |
£24 |
£66 |
|
American Express Platinum Cashback card (5% for three months, then 1.25%) |
£65.63 |
£24 |
£41.63 |
|
£15 |
None |
£15 |
[SPOTLIGHT]The Barclaycard High 5 Cashback Visa emerges as the clear winner for cashback in year one, as it pays 6% cashback on your five largest monthly purchases for the first three months, then 2% cashback on these top-five monthly purchases thereafter. For ease of calculation, I've assumed that these five biggest purchases each month total £250, giving cashback of £90 in year one. After subtracting the £24 yearly fee, cashback in the first year is £66, which works out at 2.2% of your yearly spend of £3,000.
However, if you tend to make lots of small purchases rather than five big ones, the return will not be so impressive.
The American Express Platinum Cashback card pays bumper cashback of 5% for the first three months, then standard cashback of 1.25%. However, it also charges an annual fee of £24, reducing the net gain to £41.63. This is just short of 1.4% of your yearly spend of £3,000, winning Amex second place.
As for the Capital One Aspire World card, its standard cashback of 0.5% on spending below £3,000 a year makes it less attractive to high-spending cardholders. In this example, you earn only £15 a year from cashback.
However, it's worth remembering that these results are somewhat distorted by the significantly boosted cashback rate available in the first three months with the Barclaycard and the American Express. From year two onwards the Capital One Aspire World card may actually end up on top. So it's not a card to have for a year and then bin!
Great for use abroad
Then again, charging no fees on overseas spending makes the Capital One Aspire World card more attractive than most plastic cards for use at home and away. Two other cards that don't charge additional fees on overseas purchases are the SAGA Over 50's Platinum Visa (available only to senior spenders) and the Post Office Platinum MasterCard.
While the new Capital One Aspire World card suffers from not offering a boosted cashback rate in the first couple of months, its no-load spending abroad make it a clear winner for those who like to splash their cash both here in Britain and overseas.