Internet bank Egg has announced the launch of a new cashback credit card, which will charge customers a monthly fee of £1.
The new card, branded as Egg Money World MasterCard, launches on 14 July, and will offer an interest rate (APR) of 8.9% on balance transfers and a rate of 16.9% on purchases. Unusually, however, it will also charge customers a £1 fee every month.
Bert Pijls of Egg said: ‘Egg Money is for people who want to earn cash back from either everyday spending or expensive purchases and be protected at the same time.
‘It is also for customers who want certainty in their transfer rate so they can take more control of their finances whilst continuing to be rewarded for any new purchases.’
A great card for big spenders who pay their bill in full
Martyn Saville, credit card expert at Which?, commented: ‘The cashback rewards offered by this card are amongst the best available and this card looks great for big spenders who always pay off their credit card bill in full.
‘However, it’s disappointing to see Egg charging its customers a fee just to hold the new card. Consumers already pay for using their credit card through the interest rate charged, so to add an extra fee on top of the APR punishes low spenders disproportionately.
‘The annual fee means you’d have to spend at least £100 a month to earn enough cashback just to cover the cost of the fee. Other cashback cards pay around 0.5% cashback on all spending with no annual fee, so you’d have to spend over £200 a month on the new Egg Money World MasterCard to beat these deals. If that sounds like you this could be an excellent deal.’
Cashback could be wiped out if you transfer and spend
However, Saville sounded a note of caution: ‘As with any credit card, consumers should be very wary of transferring a balance to the new card and then using it for further purchases. Egg’s order of repayment policy means that it allocates any repayments you make to the cheapest debt first. This means you won’t pay a penny off your new purchases, charged at 16.9%, until you’ve cleared the whole balance transfer charged at the promotional 8.9%.
‘Paying interest on purchases at 16.9% will soon wipe out any cashback you earn, especially compared with a Best Buy credit card for borrowing such as the Barclaycard Simplicity card, which charges a standard APR of just 6.8%.
‘Furthermore, the extras that come with the new Egg card, including travel accident insurance, extended warranties on electrical items and a price-matching promise within 30 days, are of some limited value if you use them, but are no substitute for comprehensive insurance such as a Best Buy contents or travel insurance policy.’
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