Money Insider: Sainsbury's gold card is a winner despite £5 fee

despite record amounts of credit-card balances being written off as bad debts, there are still some excellent and different new cards coming on to the market this year.

More than £4bn, equivalent to 10 per cent of the total balances on Britons' cards, was written off by lenders last year, with a further £3.5bn of bad debts struck from balance sheets in the first six months of 2010.

Whil there is still a plethora of 0 per cent balance-transfer deals on offer, the reality is that you'll need a top-notch credit record to have any chance of being accepted for these cards. Lenders have found that the 0 per cent introductory strategy does not encourage customer loyalty and, hence, we have started to see a new type of plastic on offer in an effort to build longer-term relationships.

In early July, Halifax launched its Clarity card which has a low annual percentage rate (APR) of 12.9 per cent for both purchases and cash transactions and no fees on foreign transactions or withdrawals from cashpoint machines overseas.

This week, Sainsbury's Finance also made a bold move by launching a new gold card with a £5 monthly fee. I can imagine many readers will take a sharp intake of breath and shake their heads at the thought of paying for a credit card. However, before writing it off as a nonstarter, take a look at what is on offer.

Even though it is a gold card there is no minimum income requirement. The interest rate on purchases of 9.94 per cent is almost half the average market rate. There are no fees to pay on foreign transactions, to with most cards normally add between 2.75 per cent and 2.99 per cent to the cost of your purchases.

Similarly, there are no withdrawal fees if you use the card in an overseas "hole in the wall", again saving you about 2 per cent to 3 per cent in fees.

But, unlike virtually all other cards on the market with the exception of Saga, you will not be charged interest on cash withdrawals as long as you repay your statement balance in full.

The biggest benefit with the Sainsbury's gold card is free comprehensive travel insurance, which is easily worth more than the £60 in fees you will pay on the card over a year.

The insurance is a worldwide annual policy covering a family with up to six children and includes winter sports. The card also offers double Nectar points to Sainsbury's shoppers, too, so overall you are looking at a good all-round package.

While there is no short-term incentive offered with the card, there is definitely long-term value, particularly for people who travel abroad regularly. Also £5 a month looks cheap, particularly if you compare it with some packaged current accounts that charge two or three times this amount.

Always look at a deal's set-up costs

the mortgage market may be in the doldrums but that doesn't mean competition has waned for what little business is still there. In fact, lenders are feverishly trimming rates to get best-buy exposure and win new custom even if on finer profit margins.

But as rates are tweaked by just 0.01 per cent in some cases, borrowers must look at all the costs involved. Lloyds TSB has a new "market leading" rate of 2.94 per cent (up to 70 per cent loan to value) for existing current account holders, fixed for two years.

This looks better than those at Yorkshire Building Society and ING Direct, both of which offer 2.99 per cent (to 75 per cent LTV). However, their fees, at £495 and £945 respectively, are dwarfed by Lloyds TSB's product fee of £1,895.

On a 25-year, £150,000 mortgage, the difference between a rate of 2.94 per cent and 2.99 per cent is £3.90 a month, or £93.60 over the two-year fixed term, whereas the fee charged by Yorkshire BS is £1,400 cheaper.

Taken another way, if you opted for a mortgage rate of 3.67 per cent with a £495 fee, the overall cost would work out much the same as the 2.94 per cent and £1,895 combination from Lloyds.

Fewer lenders are offering products via the intermediary market and the danger is that such a strategy will see an already depleted brokers' market suffer further.

Andrew Hagger is a money analyst at Moneynet.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

    £350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

    Java Developer - Banking - London - Up to £560/day

    £500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

    HR Business Analyst, Bristol, £350-400pd

    £350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Account Manager - (Product & Account Management, Marketing)

    £26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

    Day In a Page

    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    Countries that don’t survey their tigers risk losing them altogether

    Countries that don’t survey their tigers risk losing them

    Jonathon Porritt sounds the alarm
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz
    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on