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; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
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

    Recruitment Genius: Claims Administrator

    £16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

    Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

    £50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

    Recruitment Genius: Security Officer

    £16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

    Ashdown Group: Business Analyst - City, London

    £50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

    Day In a Page

    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss
    Tony Blair joins a strange and exclusive club of political leaders whose careers have been blighted by the Middle East

    Blair has joined a strange and exclusive club

    A new tomb has just gone up in the Middle East's graveyard of US and British political reputations, says Patrick Cockburn
    Election 2015: Meet the top 12 wacky candidates seeking your vote in May

    Election 2015

    Meet the top 12 wacky candidates seeking your vote in May
    Countdown to the election: Operation Save Danny Alexander shifts into high gear as the SNP target his Commons seat

    Operation Save Danny Alexander shifts into high gear

    The Chief Secretary to the Treasury didn’t forget his Highland roots in the Budget. But the SNP is after his Commons seat
    The US economy is under threat because of its neglected infrastructure

    The US is getting frayed at the edges

    Public spending on infrastructure is only half of Europe’s, and some say the nation’s very prosperity is threatened, says Rupert Cornwell
    Mad Men final episodes: Museum exhibition just part of the hoopla greeting end of 1960s-set TV hit

    New Yorkers raise a glass to Mad Men

    A museum exhibition is just part of the hoopla greeting the final run of the 1960s-set TV hit
    Land speed record: British-built hybrid rocket car aims to be the fastest on Earth

    British-built hybrid rocket car aims to be the fastest on Earth

    Bloodhound SSC will attempt to set a new standard in South Africa's Kalahari desert
    Housebuilders go back to basics by using traditional methods and materials

    Housebuilders go back to basics - throwing mud at the wall until it sticks

    Traditional materials are ticking all the construction boxes: they are cheap, green – and anyone can use them
    Daniel Brühl: 'When you have success abroad, you become a traitor. Envy is very German'

    Daniel Brühl: 'Envy is very German'

    He's got stick for his golden acting career and for his beloved restaurant - but Daniel Brühl is staying put in Berlin (where at least the grannies love him)
    How Leica transformed photography for ever: Celebrating 100 years of the famous camera

    Celebrating 100 years of Leica

    A new book reveals how this elegant, lightweight box of tricks would transform the way we saw life on the street and in fashion, on the battlefield and across the world