Sean Gardner, Chief Executive of MoneyExpert.com, said:
"The new Sainsbury’s Bank card is more evidence of the comeback of cashback type offers – but it’s a reward scheme with a difference as companies start to get clever and look to target different sectors of the market. We expect to see more offers like this as firms look to place greater focus on reward schemes to attract new business.
"The reward of Nectar points that are equivalent to two per cent cashback on Sainsbury’s purchases and 0% APR on these for 12 months is one of the best offers around. However, if you don’t shop at Sainsbury’s, the offer is not as attractive.
"Currently around one in 10 standard cards on the market offer cashback but the average is a pretty feeble 0.72 per cent. There are just a handful of cards which offer substantial rewards – American Express has just introduced a three month five per cent cashback deal and Capital One offer four per cent. But as both these offers are only for three months their cashback offers drop dramatically afterwards."
"Abbey offers five per cent on its cashback credit card but again there are substantial strings attached. The five per cent only applies to the first £1,000 spent at a major supermarket and it only runs to January 31st 2008.
"Cards offering a financial reward every time the customer uses them are a genuine way for credit card companies to reward loyal customers. However it is only any good if it fits in with how you use it sensibly.
"Anyone who picks a card purely for its cashback is making a mistake if they don’t pay off their balance every month. It’s almost certain the cashback you get will be wiped out by the interest you pay."
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