Bundling ‘free’ travel insurance with bank accounts and credit cards that charge fees is one of the latest wheezes banks are using to attract customers. However, more often than not it seems the banks end up getting a better deal than their customers, so will this new credit card from Sainsbury’s be any different?
On the surface the deal looks tempting. For £5 per month (i.e. £60 a year) you get worldwide travel insurance for your family, no fees when spending overseas, an APR of 9.94% on purchases and balance transfers and double nectar points on Sainsbury’s shopping.
Sainsbury’s reckons the extras are worth over £300 a year. My reckoning is rather less than this, but the card could still be worthwhile.
No fees on foreign spending is welcome (most credit cards charge 2.75%), but then the Halifax Clarity card does this without charging a monthly fee, albeit with a slightly higher 12.9% APR. The extra nectar points could be worthwhile if you shop at Sainsbury’s anyway - they’re equivalent to about 0.5% cashback, which is ok but not as good as some dedicated cashback cards.
But the bundled travel insurance is the main carrot here. If you don’t need any then this card is unlikely to offer value for money.
Fortunately the travel insurance is a pretty good policy. It providers comprehensive levels of cover for a family with up to 6 children worldwide (including the US), including winter sports and baggage cover. The main downsides are no cover if you’re 65 or over and policy excesses of around £100-150, making most small claims pointless. Nevertheless, it’s a decent policy and would very likely set couples and families back more than £60 a year – making the credit card good value for money if you’d buy this type of insurance anyway. Note: if you’re single then you can buy a similar travel insurance policy for around £35, reducing the appeal of Sainsbury’s gold card.
Unlike many cards there's no interest on cash withdrawals if you repay your balance in full and on time each month. But fail to do so and cash withdrawals will be slapped with interest of 24.93% APR straight away, which is excessive (albeit typical for a credit card). The penalty for late payments and exceeding your credit limit is £12.
In summary, if you need family travel insurance, like nectar points and spend money abroad, this card looks a good deal – provided you don’t use it to withdraw cash.
But if you’ll use the card to borrow, either by transferring an existing balance or via new purchases, you’ll probably do better to use a 0% interest deal.
And if you don’t plan to borrow /need travel insurance and just want to avoid fees on overseas spending, then consider a Halifax Clarity Card.