Lloyds Bank has launched a new credit card that allows customers to earn cashback on every purchase.
Customers earn 0.25 per cent on every pound spent up to £4,000 and 0.5 per cent for every £1 spent above that amount.
New customers also receive a £20 cash back bonus when they spend £1,000 in the first three months.
Customers can track the accumulated rewards as the cashback amounts are visible on their monthly statements.
Any cashback earned accrues over the calendar year and is deposited directly into the customer’s credit card account in January each year as a lump sum.
Elyn Corfield, managing director at Lloyds Bank, said: ‘We are delighted to have launched our new cash back credit card, which rewards customers for every purchase they make.
“Whether it’s groceries, clothing or restaurants, our customers can earn money back, which is then saved and deposited into their account at the beginning of each year.”
How does it stack up?
Shoppers eager to put the past 18 months behind them and start splurging on the activities and events they’ve felt so deprived of should consider this easy cashback offer.
However, the return on offer is modest and while the £20 incentive to spend £1,000 in the first three months represents a 2 percent return, the 0.25 percent interest on your first £4,000 provides just £10 cashback each year .
For someone who spends £1,000 each month for 12 months, he could expect a total of £70 in cashback, given the start-up incentive and the 0.5 percent return on spending above £4,000.
For cash back enthusiasts, the new Lloyds credit card will go hand in hand with American Express cash back cards.
Lloyds’ disclosure is well-timed, as Amex has slashed its rates.
Starting this week, Amex cardholder cashback rates will be cut by as much as 50 percent in some cases.
The free customers currently receive 1 percent cash back when spending over £5,000 per year, but under the changes, any spend up to £10,000 will earn just 0.5 percent.
Paying cardholders will receive 0.75 per cent cash back on spending up to £10,000, down from the current 1 per cent rate.
Michelle Stevens, deputy editor at the personal finance comparison site, Finder said: ‘Unlike some of the Amex range, there is no annual fee associated with the Lloyds deal.
“However, an annual fee may be worth it if the value of the cashback you would earn, plus any other benefits, outweighs that fee.”
Some UK retailers don’t accept Amex due to the fact that it charges them around 3 percent for every sale they make.
For those nervous about the fact that there is a fee on their card, the main competitor is Amex’s free Platinum Cashback Everyday Card.
The 0.5 percent interest on all expenses up to £10,000 and 1 percent beyond that is more generous than what Lloyds offers.
New cardholders also get 5 percent cash back on their purchases – up to a limit of £100 – for the first three months after joining – much better than the £20 bonus offered by Lloyds.
It’s also worth pointing out that not all retailers accept American Express. It charges merchants more than Mastercard and Visa for every sale they make, meaning some retailers are choosing to avoid Amex cards altogether.
There are very few big chains now that won’t accept it, but you’re much more likely to have a problem if you’re in smaller stores across the UK.
However, some notable organizations still don’t accept Amex, including Tile Giant, Dunelm, and Sky.
The only other comparable cash back deal is offered by Santander, which comes with a monthly fee of £3, or £36 per year, and has an APR of 23.7 percent.
Are All in one credit card Mastercard pays 0.5 percent cash back on purchases and offers a range of other benefits, such as no foreign transaction fees for purchases abroad.
Meanwhile, Barclaycard, which was in the news in May for announcing drastic cuts in borrowers’ credit limits, was offers a card that pays 0.25 percent cashback on all purchases.
It also comes with free foreign spending and an APR of 22.9 percent.
In contrast, the Lloyds cash back credit card has an APR of 19.9 percent, while the free Amex has an APR of 22.2%.
Choosing the best credit card, as with many things, comes down to whether the benefits on offer are the most suitable for your circumstances.
You may be looking for a card to pay off debt — and in that case, a balance transfer credit card may work best.
This allows customers to pay off debt by transferring the entire debt to the new card, often with the promise of 0 percent interest for a fixed period.
Or equally, you can be optimistic that, with the vaccine roll-out in full swing, you will soon make up for lost time going on holiday abroad and therefore need a credit card best suited for spending in Abroad.
But if you decide that a cash back or rewards credit card is for you, a lot will depend on how much money you spend and how you spend it.
If you’re spending a lot of money, you might want to consider a card that compliments it, like the one from Amex Preferred Rewards Gold Credit Card.
While it comes with an annual fee of £140 to be paid after the first year, it offers cardholders 20,000 bonus points when they spend £3,000 in their first three months – which is enough for a £100 gift card from Amazon and it can can also be converted into Avios points.
Cardholders will then earn one Membership Reward point for every £1 they spend and can now also get £5 back twice a month by spending on Deliveroo.
For those who are not willing to commit to the fee or are confident they will spend enough with such a card, the free Amex cashback card or the new Lloyds credit card may be a good option.
You can get better returns with Amex’s free cash back credit card, but at Lloyds you can rest assured that you can use your card anywhere.
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