Focus on: Capital One launches new range of cashback cards

Published:
13 April 2012
Topic:
News,Money,Credit Cards

If you pay your credit card off in full each month a card that rewards you for your spending is well worth taking advantage of.

There is now a new range of cashback cards, Aspire, from Capital One.

Here we take a look at the new offerings...

What's the deal?

The Aspire World card is the rebranded Capital One World card. It pays 5.00% cashback for the first three months.

The cashback you can earn at this rate is capped at £100, meaning it applies to the first £2,000 of spend.

After the first three months, you then earn 0.50% on all purchases made on the card up to £5,999.99. The rate of cashback rises to 1.00% on purchases from £6,000 to £9,9999.99 and again to 1.25% on all spending above £10,000.

Cardholders also receive an Identity Alert service provided by the credit reference agency Equifax. This entitles you to two free credit reports a year.

You will also receive an email within seven days if anything changes on your credit file. The idea is that this should help reduce the chances of you falling victim to identity theft.

Capital One's Aspire Elite card is brand new and comes with a slightly different offering.   It still offers 5.00% cashback for three months but the cap is higher at £200.

The standard rates differ from the World card too. You earn 1.00% cashback on the next £14,999.99 spent on the card rising to 2.00% on spending between £15,000 and £49,999.00 and 1.35% on spending above £50,000. 

The Elite card is clearly aimed at high spenders and you must earn at least £50,000 a year to qualify.

Cardholders will receive a £12,000 credit limit and it also comes with a 24-hour concierge service to arrange things such as flights, hotels and restaurant bookings.

You also benefit from purchase protection insurance which offers cover against accidental damage, fire and theft; an extended warranty on a range of electrical goods purchased with the card and Best Price Protection.

This is an insurance that pays out if you buy something costing £50 or more and then see exactly the same product somewhere else priced at least £50 cheaper.

Any drawbacks?

There is one rather large catch to the Aspire Elite card: and that is a hefty £120 annual fee.
Both cards have a representative annual percentage rate (APR) of 19.9% (variable) which is higher than the average credit card APR.

Both of these cards are therefore best suited to people who clear their balance in full each month.

What's the verdict?

Around 60% of credit card holders pay off their balance in full each month yet cashback credit cards still only account for a minority of the market. Millions of people could therefore be getting more from their credit card.

It is great to see new cashback cards launched as it will help raise awareness of the benefits this type of credit card can offer.

But cashback credit cards are not for everyone: if you don't pay your credit card bill off in full each month, the interest you'll be charged will outweigh the value of the cashback.

However, for those who do a cashback or other type of rewards credit card is a great idea - you get something back each time you use your card.

How do the deals compare to other cashback cards?

The Aspire World card challenges the American Express Platinum Cashback card which has dominated the market for a number of years. The Amex card also offers 5.00% cashback for the first three months, up to a maximum of £100.

However, it has a standard cashback rate of 1.25% so it is a simpler structure than the Aspire's tiered cashback rates. With the Amex card you also earn 2.50% for one month each year on the anniversary of when you took the card out.

However, it does come with a £25 annual fee. Because of this some people may gravitate towards the Aspire World card instead.

The other aspect which could weigh in its favour is the fact Aspire World is a MasterCard which is more widely accepted than American Express.

However, despite the £25 fee, you'll probably earn more from the Amex card over the course of a year.

Someone who spends £1,000 a month on their credit card would earn £200 cashback with the American Express Platinum Cashback card (after the fee has been deducted) compared with £170 if they had the Aspire World card.

The Aspire Elite card has a more generous cashback rate but once the initial 5.00% offer is over you need to spend a further £15,000 on the card before the top 2.00% rate kicks in.

The £120 annual fee means that even though you can earn 2.00%, if it's only  cashback you're after, the Amex Platinum will still be better option.

Someone who spends £2,000 a month on their card will earn £350 cashback with the Amex deal compared to £330 with Aspire Elite once the annual fees have been deducted.

That said, Aspire Elite is aimed at a different market. It is trying to appeal to those who want more from their credit card.

For higher earners who travel a lot the concierge service could be an attractive benefit. And when you look at other cards offering this type of service the £120 fee doesn't look bad.

NatWest's Black Card has a £250 fee an requires a minimum annual income of £100,000, while the American Express Platinum card (which is a charge card as opposed to credit card) had a £450 annual fee.

However, they do offer a more extensive range of benefits than the Aspire Elite card such as access to airport lounges and travel insurance.

Whether it's a credit card or current account, when it comes to annual or monthly fees, you need to weigh up how valuable the benefits are to you.

If you'll make use of them a fee can be worth paying, but if you won't you might as well go for the cheaper option.

Written by , head of content at MoneySupermarket.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

We're free, independent and compare all UK credit cards, as well as offering exclusive deals you can't get anywhere else.

Contact MoneySupermarket.com at Moneysupermarket House, St David's Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2011.

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