Asda launches cashback credit card

Last month M&S launched a full service bank, now Asda is relaunching its finance business with a new ‘Asda Money’ brand.

A new cashback credit card is the biggest element of Asda’s relaunch. It’s called the Asda Money credit card. This card will give you 1% cashback on all your spending at Asda including fuel. You’ll also get 0.5% cashback on all your spending away from Asda.

You won’t have to pay an annual fee to get Asda’s card and it also comes with a 12-month 0% balance transfer deal.

So if you’re a regular Asda shopper, it sounds pretty attractive. But how does it compare with the competition?

Other cashback cards

Well, different cashback cards are appropriate for different people, but many folk will find that the Asda card isn’t the best option for them. Let’s look at the rival cards:

Capital One Aspire World

The Capital One Aspire World card pays 5% cashback during the first three months you have the card, capped at £100. After that, a tiered rate of cashback applies, depending on how much you spend.

Spend up to £6,000 and you’ll earn 0.5% cashback. If you spend between £6,000 and £9,999, you’ll get 1% cashback while you’ll get the top rate of 1.25% if you spend more than £10,000. There’s no fee for this card.

So if your total credit card spending is less than £6,000 a year and you spend a lot at Asda, the Asda card will win out. But if your total credit card spending is more than £10,000 a year, the Capital One card makes more sense.

American Express Platinum Cashback

Much like the Capital One card, the American Express Platinum Cashback pays 5% during the first three months with the card, capped at £100. After that you enjoy a 1.25% flat rate on all of your spending.

What's more, in your anniversary month with the card, so long as you spend £10,000 over the year, that rate doubles to 2.5%. There is an annual fee of £25 to consider though.

Santander 123

The Santander 123 cashback card will pay you up to 3% cashback on some of your spending. Here’s how it works:

As a special offer, Santander is also paying 1% cashback at most leading pub and restaurant chains until the end of September. Read more in Santander 123 pays cashback at bars and restaurants.

On the downside, you won’t get cashback on all of your spending, and you’ll also have to pay a £24 annual fee. However, if you take out the 123 current account as well, that annual fee is waived. (Opening a Santander current account is a bit of risk though – the bank still has a pretty poor reputation for customer service.)

Capital One Aspire Elite

The Capital One Aspire Elite card is firmly aimed at big spenders – if your salary is less than £50,000, you definitely won’t get this card. Cardholders also have to pay a pricey £120 annual fee.

In return for the high fee, you get 5% cashback for the first three months you have the card and after that, up to 2%. Here’s how it works:

With the high fee, this card is only going to make sense if you spend at least £25,000 a year with your card.

Aqua reward

[SPOTLIGHT]The Aqua reward card is aimed at people with poor credit histories. It comes with a painfully high 34.9% interest rate, but if you pay off your bill in full each month, you won’t be hit by interest charges. It also comes with a very generous 3% cashback offer – up to a maximum of £100 cashback each year.

The cashback offer is very tempting, but it’s a bit worrying that people with a poor track record for managing their finances may be encouraged to spend too freely by the cashback offer.

Other supermarket cards

Of course, Asda’s card isn’t just competing against other cashback cards. It’s also a rival to cards offered by the other supermarket banks.

I particularly like the Tesco Clubcard Credit Card for Purchases. It comes with an excellent 16-month 0% period for purchases. Let’s say you spent £2,000 on new furniture using this card. As long as you make your minimum repayment each month, you won’t have to pay any interest on the resulting debt for 16 months!

Admittedly, this isn’t the longest 0% purchases period on the market – that honour goes to the NatWest YourPoints card which currently has an 18-month special offer. However, I think that Tesco’s card is still a cracking product. Just note that the 0% period begins when you take out the card, not when you make the purchase.

Sainsbury’s strongest card is the Sainsbury’s Low Rate Credit Card. This card comes with a super-low 6.9% interest rate that applies for purchases and balance transfers.

True, you could get 0% deals with other cards, but the Sainsbury’s card makes your life simpler because you don’t have to worry about deals expiring and moving debts between cards. Instead you can make use of a low interest rate for as long as you need it.

Final verdict

Asda’s new card is a decent product that should appeal to plenty of Asda shoppers. It’s a good start for the supermarket’s new ‘Asda Money’ brand.

That said, both Tesco and Sainsbury’s offer a wider range of quality cards, so we’ll have to wait to see whether Asda chooses to compete across the whole credit card market instead of just fighting hard in the cashback segment.

More on credit cards:

Barclaycard halves balance transfer fees

The best credit cards to use abroad

The credit cards that offer 0% interest and rewards