Money Insider: Capital One's latest credit card aspires to be 'traveller friendly'
Friday 21 June 2013
Capital One has become the latest credit card company to launch what it calls a "traveller friendly" credit card. It's friendly because it doesn't hit holidaymakers with foreign usage fees.
Most credit and debit cards charge a loading fee of up to 2.99 per cent each time you use your plastic abroad. The charge is added when you pay for goods in shops or restaurants, or to withdraw money from a hole in the wall.
But with the Aspire World card from Capital One, there are no fees on overseas purchases – although there will still be an ATM charge. The big plus point and a differentiator when looking at similar cards is that customers using this card in the UK will also be able to earn up to 1.25 per cent cashback on all transactions.
There are a handful of other credit card products designed to offer a cheaper deal for holidaymakers.
These include Nationwide Select (which requires you to have a current account with the building society), Post Office, Saga and the Aqua Advance card, all of which don't levy foreign usage fees on purchases either.
It's worth bearing in mind that all these cards still charge a foreign usage fees for withdrawing cash from an ATM, typically around 3 per cent, so withdrawing £100 worth of euros or dollars could end up setting you back £6 in charges and put a dent in your holiday spending budget.
Recent research from Moneynet revealed that some families were paying out more than £50 in card charges over the course of a fortnight abroad, money that could be put to much better use while on holiday.
Credit cards should only be used to withdraw cash as an absolute last resort because on top of the fees these withdrawals are often charged at a far higher interest rate and, unlike purchases, do not qualify for an interest-free period.
It's about time consumers were offered a greater choice when it comes to deciding which credit card to use when travelling abroad and hopefully more card providers will focus on this area.
By including a competitive cashback incentive with Aspire World, Capital One has made this card a good all year round deal, and not just plastic that you will use for a couple of weeks on your annual summer break.
Because there is no foreign usage fee it means that in many instances it will be cheaper to pay with your credit card, rather than a debit card, when spending abroad.
Just ensure you clear your statement balance in full when you get home, otherwise the interest costs will take the shine off the savings you have made on overseas fees.
Credit cards that don't levy additional fees for overseas transactions are very much in the minority so this new Aspire World card is likely to prove popular, even more so as it includes a generous cashback incentive.
The market is awash with long term 0% balance transfer deals, so it's refreshing to see a lender focussing on overseas fees for a change, an area that costs UK consumers millions of pounds every year.
Coventry leads the way in charity-linked savings
There are a handful of savings accounts available where building societies have a link up with a local or national charity although most are very uncompetitive.
A percentage of total customer balances on these accounts is donated to a worthy cause, however the interest rates offered on many of these charity savings accounts is very poor.
In the majority of cases you'd be better off opening a standard savings account paying a better rate and then making your own donation to your chosen charity from the interest earned.
The one exception when it comes to providing good value charity linked savings accounts is Coventry Building Society. For a number of years it has offered a range of "Poppy" savings accounts with great interest rates and a percentage of customer balances going to The Royal British Legion.
In fact since 2008 this association has seen Coventry hand over more than £8million to this worthy cause.
Rather than rest on its laurels, Coventry Building Society last week launched a 22 month race for life savings bond paying 2.1 per cent with a further 0.1 per cent of all cash invested being donated to the Cancer Research UK charity.
If you look at the best two year fixed rate bonds in the market, from ICICI bank at 2.3 per cent and State Bank of India at 2.25 per cent, this new deal looks very attractive, particularly as it can be opened with as little as £1
This is an excellent deal for the consumer and Cancer Research UK; it's a shame that other banks and building societies aren't as generous.
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