Major high street bank launches fee-free credit card offering 1% cashback on spending abroad – is it worth it?
A MAJOR bank has launched a fee-free credit card which can help cut the cost of your holiday spend.
The NatWest Travel Reward Credit Card gives you 1% cashback on overseas spending on planes, trains, hotels and car rentals.
For every £100 spent this would mean a return of £1.
Meanwhile, if you make a purchase with a ‘partner retailer’ such as National Express or Enterprise cars the amount of cashback you can earn soars to up to 15%.
All the cashback you earn is collected in the form of reward points, which you can convert into cash or vouchers to spend online or in shops.
The card has no annual fee and there are no foreign transaction fees, which means you can spend abroad without paying a penalty.
Rob Burgess, editor of travel news website Head for Points, said this is “the best card on the market” due to its 0% transaction fees and 1% cashback.
“Everyone should have an FX-free card to use outside the UK,” he said.
“What’s attractive is that the 1% cashback on travel spending would stack with this, so not only would you get no foreign exchange fees on your hotel and car hire etcetera but you would also get the 1% cashback on top.”
Are there any pitfalls?
Although the card gives you a generous return on your travel spending, when you use it to make day to day purchases at home and abroad, such as eating in a restaurant or food shopping, the rate drops to just 0.1%.
While this rate is alright when you are abroad as very few banks offer cashback on overseas spending, it is a terrible return once you are back in the UK.
A card such as the Barclaycard Avios Mastercard – which is also free – will give you 1% cashback on your UK spending if you use your Avios points wisely.
With this card you collect 1 Avios point for every £1 you spend, which you can then use to book British Airways flights.
But you can still get 0.5% cashback if you decide to convert your Avios into Nectar points to spend at shops including Argos and Sainsbury’s.
Meanwhile, the new Barclays and Amazon credit card, which was launched a fortnight ago, gives customers up to 2% back in rewards.
Users can earn 1% in rewards on all Amazon purchases and 0.5% on their everyday spending outside of Amazon for the first year.
How to apply for a credit card
HERE is everything you need to know about applying for a credit card:
Which card do you need: The first thing you need to do if figure out what kind card you are going to need.
Luckily for you, you are in the right place as this article will explain what kind of card you need for your situation.
Check your credit score: Your credit score determines how reliable you are when it comes to borrowing money.
The better your credit score the more likely it is that banks will accept you for the best deals.
When you apply for a credit card your bank will check your credit score to see if you suitable for the deal they are offering.
If you have a bad credit rating the bank may not want to lend you money in case you can’t pay it back.
You can find out how to check your credit score here
Don’t apply all over the place: If you just apply for loads of different deals you may end up hurting your chances of getting the best deals.
If you apply and your application gets refused it will leave a mark on your credit file which means that providers might be less likely to lend to you.
Always check using an eligibility such as MoneySuperMarket’s Smart Search to see how likely you are to be accepted for a credit card.
Don’t believe everything you see: Just because you see a credit card advertised with a great rate online, it doesn’t mean that that is the rate you will end up getting.
By law credit card companies have to give the rate they advertise to the 51% of the people who successfully apply for a credit card.
But, depending on your credit score you might get a different interest rate or a shorter 0% period.
You don’t have to accept the rate you are offered and you can always shop around for a better deal.
Fill in your application form: Once you have decided on the card you are after just fill in the online form on the credit card company’s website.
Try to be as honest as possible with your credit details.
If your application is declined it might be worth asking the bank for a copy of your credit file to see why it is that you weren’t accepted for the credit card.
If you are accepted can take a week or two for your card to arrive.
The total cost to borrow money on the NatWest card is also higher than competitors, so it is not a good option if you cannot pay your balance off in full, suggests Andrew Hagger, founder of the advice website MoneyComms.
The Annual Percentage Rate (APR) of 27.9% is higher than most new cards, which currently charge 24.9%, he said.
Mr Hagger said: ‘Make sure you pay your balance off in full otherwise your interest charges will more than wipe out any rewards benefits you may have earned.’
Failing to pay off your credit card balance each month can cause the amount you owe to snowball, which could plunge you into debt.
How does it compare to others travel cards?
Digital banks such as Monzo, Chase and Starling offer debit cards which allow you to spend fee-free while abroad and have a competitive exchange rate.
Customers who use Monzo as their main bank account can make unlimited fee-free cash withdrawals abroad when in the European Economic Area, which includes Spain, Greece and Cyprus.
Meanwhile, Chase and Starling do not charge you to withdraw money from an ATM anywhere in the European Union.
In comparison, with the NatWest Travel Reward Credit Card you will pay a fee worth 3% of the transaction when you take out cash from an ATM.
Of the three, only Chase offers cashback on overseas spends.
Chase customers can get 1% cashback on spending with the bank’s current account while abroad.
Users must pay in £1,500 a month into the account to receive the cashback, which is capped at £15 a month.
The Chase account is also a debit card, which has fewer protections than a credit card when making big purchases such as flights and hotels.
Credit cards purchases worth between £100 and £30,000 automatically qualify for Section 75 protection, which can help you to get your money back if something goes wrong.
Mr Burgess said: “The NatWest card is worth having for someone who spends a lot of money abroad, especially someone whose hotel bill is a large percentage of their overall holiday cost but I’d keep it in a drawer when not travelling.”