Review of the week: Sainsbury's Credit Card

Published:
13 November 2009
Topic:
News,Money,Credit Cards,Product review

A new report warned that credit cards are set to become more expensive and we already know that providers are clamping down on who they'll offer credit to. But it doesn't mean it's all bad news if you're looking for a new credit card.

Over the past few weeks we've seen a number of credit card providers launch new deals or enhance existing propositions. One is Sainsbury's Finance which has recently increased the interest-free period on its credit card from three months to 10. So what's the offer and is it a suitable card for you?

What's the deal?

The Sainsbury's Credit Card offers a 10-month interest-free period on both balance transfers and purchases, making it a market-leading deal. There are other credit cards with longer interest-free periods on balance transfers or purchases, but if you want a card to use for both purposes, this is well worth considering.

In addition to the attractive interest-free period, you also earn Nectar points each time you spend on the card. You earn two points for every £1 spent in Sainsbury's during the first two years and one point for every £5 spent on the card elsewhere.

You will need to have a Nectar card in order to be eligible for this product but, if you don't already have one, you can get one easily by applying at nectar.com.
 
And it's worth highlighting that as well as earning Nectar points for using the Sainsbury's Credit Card, you can continue collecting them with your standard Nectar card as well so you'll accumulate rewards more quickly.

Nectar points can be exchanged for a variety of things including Sainsbury's vouchers, days out, magazine subscriptions and electrical goods.

What to watch out for

If you aren't in a position to pay your credit card off in full each month, then bear in mind that once the interest-free period ends you'll attract interest at the standard annual rate which is 15.9%. You should therefore aim to clear your debt during the interest-free period.

The 0% offer on spending done at Sainsbury's is actually slightly longer - you won't be charged interest for a whole year, compared with 10 months for all other spending. However, because of the way your monthly repayments are allocated you will start accruing interest on any non-Sainsbury's purchases and any transferred balance after the first 10 months.

If you do transfer a balance over from another card, you'll be charged a 3% transfer fee - you won't pay this upfront, it will be added to your total debt. Balance transfer fees are now the norm, although 3% is at the upper end.

As with all credit cards, you should avoid using it to withdraw money from a cash machine. Not only will you be charged a higher rate of interest - 24.93% - and a withdrawal fee of 3% but the order of payments mean that cash advances are the last to be repaid.

 

Verdict

This is a great card if you're looking to make a balance transfer, a card for purchases or both. Not only do you benefit from a long interest-free period, but you'll also get something back - Nectar points - when you spend on the card.

However, you'll only qualify for the Sainsbury's Credit Card if you have an excellent credit score. If your credit history isn't quite as good as it could be, don't waste your time applying as you won't be accepted and it could have a negative impact on your score which may lessen the chance of a successful credit application in the future.

Want to apply for the Sainsbury's Credit Card? Click here.

Top tip

Before applying for any form of credit or borrowing, get hold of a copy of your credit report from one of the credit reference agencies: Equifax, Experian or Callcredit. You will then be able to check what information is held about you. If anything on your file is incorrect you can make a notice of correction which will be seen by lenders if they do a credit search as part of an application you've made.

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.

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