At last, real credit card choice

MONEY TALK

This is my idea of credit card competition. The Alliance & Leicester's new Money Back card - which offers a cash rebate of up to 2 per cent on your spending - looks an excellent deal for people who pay their bills in full each month (see back page). I have long been a proponent of such cashback cards, given that the recent spate of low interest rate cards are irrelevant to the 50 per cent of us who pay no interest.

The A&L's card, the first of its kind in the UK, is likely to be copied. The Discover card - a prominent cashback brand in the US - has 38 million customers (more than all the UK cards put together). So cashback cards clearly have potential.

But while full-payers should sign up now, they should also look out for other offers. The A&L has pared profit margins but another card issuer could still trump it - perhaps by offering a higher rebate for really big spenders while charging a higher interest rate for those who get into debt.

The A&L's offer could affect affinity credit cards. For full-payers, these are a potentially no-cost way of giving to charity. Every time you use the card, the issuer makes a small donation to the linked charity out of the commission it is paid by retailers.

But with the A&L, cardholders can now get at that commission themselves. In fact, the A&L's cash rebate is potentially so much higher than the affinity card donations, holders could continue to support their charity from their rebate and still be quids in. The A&L estimates an average first-year rebate of pounds 43, while the same spending on an affinity card might earn a charity just pounds 13. Alternatively, we could see issuers forced to raise their donations to keep their affinity customers. Whichever - it's all good news for cardholders.

PART OF the problem with encouraging people to get to grips with pension planning is that the idea of becoming a "pensioner" is hardly aspirational. In the past I have advocated renaming personal pension plans to emphasise the positive. Steer-off (Super Tax-Efficient Early- Retirement Off Forever Fund) was one half-decent shot, now I hear Norwich Union wants to rename the pensioner because of the negative associations of the word.

It argues that some sex symbols - Goldie Hawn, aged 50, and Sean Connery, 66 - are, given present working patterns, old enough to be retired. But we wouldn't dream of thinking of them as pensioners. If you have a suggestion call Norwich Union on 0645 330645 or send a postcard to me. Meanwhile, for aficionados, our pensions survey starts on page 16.