Is it too early to write off reward based credit cards?

Andrew Hagger of Moneycomms looks at recent developments in the credit card rewards market.

Over the last 18 months there have been many examples of credit card rewards or cashback deals being scrapped or watered down following the revised interchange rules – a move which has decimated a profitable income stream for credit card companies.

However despite the doom and gloom there is evidence that the credit card rewards scheme is far from being dead and buried.

Only last month Asda Money announced details of its new Cashback Plus card and today we’ve seen the launch of the new intu card powered by MBNA.

The intu card is collaboration between MBNA and intu, with the latter running some of the biggest shopping centres in the UK, including Lakeside, The Trafford Centre, Metro Centre and Eldon Square.

So is it a good deal?

Although it’s an intu branded card, you earn the same amount of rewards wherever you use it, it’s not one of those cards where you earn an enhanced level of points in store.

If you spend £250 on the card in the first 90 days you’ll earn a £20 intu gift card and if you reach £3,000 of spend in year one you’ll get a further £20 gift card and if you spend £5,000 or more a further £20 gift card – so a possible £60 reward on £5,000 of spend which equates to a return of 1.2% which is pretty decent in today’s market.

The card also comes with 12 months interest free on purchases and the representative APR for purchases is 16.9% some 2-3% lower than the majority of mainstream UK credit cards.

Unlike the new Asda Money card there is no annual fee to pay, plus when you visit intu centres you are entitled to exclusive cardholder discounts in restaurants and other benefits such as free buggy hire.

For the first 12 months cardholders also receive free membership of the Gourmet society worth approximately £70.

From year 2 onwards the earn rate is less generous with a £10 gift card at £3,000 spend and a further £10 gift card if you hit £5,000 spend – an equivalent reward rate of 0.4%

In terms of rewards cards it’s an excellent deal particularly in year one, and although the year 2 rewards are less appealing, the ability to earn the same level of rewards wherever you shop plus qualify for specific benefits in the intu shopping centres should make it a big hit with shoppers.

Just one word of warning – as ever don’t sign up for any rewards or cashback based credit card if you’re not confident that you’ll clear your credit card statement balance in full every month – otherwise your interest charges will wipe out any benefit earned.


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