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HSBC launches rewards credit card: is it worth going for?

We crunch the numbers on how much you need to spend to unlock the rewards

HSBC has debuted a new credit card that allows you to earn rewards as you spend, at a time many other providers are scaling back their deals. So, is it worth signing up?

The new HSBC Rewards credit card allows you to accrue points through the Mastercard ‘Pay with Rewards’ scheme. It comes with a generous helping of bonus points, worth £150 over five years.

Here, we explain what the HSBC Rewards card offers, what else is available in the market and how much you’d need to spend to benefit.

What does the HSBC Rewards card offer?

The HSBC Rewards credit card offers you one point for every £5 you spend. You’ll also get 2,500 bonus points (worth £25 in rewards) with your first purchase.

If you manage to spend £10,000 every year, you’ll earn 2,500 points annually for the first five years you have the card.

Unlike some top rewards credit cards, this deal comes with no annual fee, plus six months interest-free on purchases and balance transfers (although you’ll pay a 2% balance transfer fee).

The representative APR on borrowing is 21.9%.

Where can you use the points?

HSBC says you can spend your points anywhere that accepts Mastercard.

So, you could use your points to pay for your next flight, supermarket shop or to fill up your car.

Points can be redeemed against everyday purchases using the Pay with Rewards app or website, in store or online.

To redeem points as you spend, you just need to turn on the ‘Next Purchase’ feature. Once the points have been used up, the feature will automatically switch off. There’s no limit on where you can redeem your points – unlike rewards credit card deals that are linked to a retailer.

Just bear in mind that the points will expire after three years, so don’t wait too long before redeeming them.

Why are reward credit cards disappearing?

The reward credit card market has been pretty stagnant over the past few years, with many providers closing or scaling back deals.

Indeed, the number of rewards credit cards in the market has dropped off sharply this year, with a 20% fall in the range of products available compared to 2017.

  May 2017 May 2018 May 2019
Number of reward credit cards on the market 77 71 62

Source: Which? analysis of Moneyfacts data.

Many providers blame the EU interchange fee cap which was introduced in December 2015.

This limited the fees that schemes such as Visa and Mastercard could charge retailers for accepting credit and debit card payments, a cost that was normally passed on to customers.

The move has led to providers such as Asda Money, Capital One and Tesco Bank to pull or adjust their deals.

Could you benefit from HSBC rewards?

Rewards credit cards are best used regularly for your everyday spending.

Many don’t come with 0% periods on spending – currently just 25 out of 62 reward cards have a 0% purchase offer, according to Moneyfacts data. Where cards do have an interest-free period, such as the HSBC Rewards credit card, the offer tends to be for a limited time period.

So, it’s best to pay off what you spend each month, to ensure you don’t pay any interest and benefit fully from the points you collect.

To work out if you could benefit from the HSBC Rewards card, check if your spending habits could earn you a decent return. We’ve crunched the numbers for a range of monthly spends in the table below.

Typical monthly card spend HSBC Rewards points you could earn What the points are worth Does it qualify for 2,500 annual bonus points? Annual reward value year one Annual reward value years two to five
£100 20 20p No £27.40 £2.40
£200 40 40p No £29.80 £4.80
£300 60 60p No £32.20 £7.20
£400 80 80p No £34.60 £9.60
£500 100 £1 No £37 £12
£600 120 £1.20 No £39.40 £14.40
£700 140 £1.40 No £41.80 £16.80
£800 160 £1.60 No £44.20 £19.20
£900 180 £1.80 Yes £71.60 £46.60
£1,000 200 £2 Yes £74 £49

Source: Which? analysis of HSBC Rewards scheme.

As you can see, you really need to be spending £900 a month or more to be getting the most benefit from the HSBC Rewards card. This level of spending will ensure you benefit from the annual points boost for five years.

If this is a bit steep, you may be better off with an alternative deal that allows you to earn points at a quicker rate.

Other reward credit cards typically allow you to collect points for every £1 or £2 spent, rather than for every £5. So if you typically spend less than £900 a month, it could take you a long time to see a benefit.

The best reward credit cards

Despite the downturn following the cap on interchange fees, there are still some decent rewards offers to choose from that could earn you cashback or points.

The John Lewis and Waitrose Partnership Credit Card is the most highly rated rewards credit card among Which? customers and is from a Which? Recommended Provider.

The card allows you to earn one point for every £1 you spend in store or online, and for every £2 spent elsewhere. New customers can get 2,500 points (worth £25) when they spend £200 at John Lewis or Waitrose within 90 days.

The card comes with no annual fee, offers 0% on purchases for nine months and has a representative APR of 18.9%.

M&S Bank and Tesco Bank are also Which? Recommended Providers and offer a range of reward credit cards that could suit your spending habits.

You can compare rewards credit cards using Which? Money Compare.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a provider before committing to any financial products.

Categories: Credit cards & loans, Money

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