If you’re looking for a new credit card – perhaps to help you spread the cost of Christmas – First Direct is offering a £25 reward for customers signing up to one of its credit cards.
And John Lewis Finance customers can bag a £20 John Lewis and Waitrose voucher for opening a Partnership Card.
Offering a sign-up bonus has proved a successful marketing tactic for banks looking to reel in new current account customers, so it’s not surprising credit card providers are jumping on the band wagon.
But should you take advantage of the card perks on offer or are they just a cheap trick to make more money off you in return? Here we explain exactly what’s on offer from First Direct and John Lewis and take a look at whether there are any better rewards elsewhere.
Cash incentives: John Lewis is the latest to add a cash incentive to its credit cards
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Prioritise the right card not the perks
While a cash bonus is tempting, before you get sucked in you need to make sure the credit card deal stacks up against what’s on offer from the rest of the market first.
While cashback, giftcards or vouchers may seem like a generous perk, such offers are designed to get you to sign up and spend more to ultimately earn the credit card provider more in interest.
If you prioritise the bonus rather than whether you can repay the debt at a low rate, you could quickly end up handing over more in interest than the value of any bonus.
Do your research
If you are unsure what the best type of credit card for you might be, read more about the different options and how to decide here.
Alternatively, This is Money has several regularly updated guides to the top credit cards for a low rate, balance transfers, holiday spending and purchases and rewards.
Read the small print
Always remember to read the card offer’s small print before you apply as there may be certain qualifying criteria, such as making a balance transfer or using it to make purchases.
Never miss payments and pay reward card bills in full
Never miss payments – get a direct debit set up but don’t rely on minimum payments to clear your debt.
And if you sign up to a credit card to spend and get rewards, remember to pay off your balance in full.
What’s on offer?
The online-only bank is offering its £25 cash sweetener on both of its credit cards. The Credit Card for Balance Transfers offers 27 months’ 0 per cent interest with a 2.29 per cent handling fee (after then standard interest kicks in at 18.9 per cent).
The card is only available to existing current account holders but its First Account is a This is Money favourite for its £125 switching incentive, £250 free overdraft buffer and award-winning customer service.
The Gold Credit Card comes with 17 months of 0 per cent interest on purchases and a slightly lower standard APR at 16.9 per cent.
The bank also recently added a cashback perk when you swipe its credit and debit cards with certain retailers. You can read more about the scheme in our review here.
Both cards come with hoops you will have to jump through to qualify for the cashback.
The First Direct Credit Card for Balance Transfers requires you transfer an existing credit card balance of at least £500 to the card within the first three months, while the Gold Credit Card with the 0 per cent spending deal requires a minimum £1,000 spend on the card within six months.
Earn as you spend: Some of the top rewards cards offer boosted rates for new customers
How does First Direct compare?
Santander, Sainsbury’s Bank and Tesco Bank all currently offer 39 months’ 0 per cent on balance transfers – beating First Direct by a full year.
You can read more about the top balance transfer credit cards in our regularly updated guide here.
The First Direct Gold Card again offers a decent deal but not the best – sitting 15 months short of the best-buy deal.
Sainbury’s Bank currently holds the top spot with a 32-month 0 per cent purchase offer, followed by a clutch of cards offering 30-month promotions. You can see all the top offers here.
What about John Lewis?
As well as the £20 voucher reward, the John Lewis Partnership card already pays one point for every £1 spent on the card at John Lewis and Waitrose, plus on John Lewis insurance and currency.
The department store often also has double points promotions you can sign up for email reminders about. And you can add up to three cardholders to help clock up as many points as possible.
For every 500 points you build up, you get a £5 giftcard, and points accrued are sent out three times a year.
The card has no annual fee but it has recently put up the interest rate from 16.9 to 18.9 per cent APR interest.
You get six months’ interest free on balance transfers (2.5 per cent transfer fee) and purchases.
How does it compare?
Reward credit cards are slightly harder to compare because how good the deal is for you will depend on whether you will make use of the loyalty scheme.
For most people, the most rewarding option is often one of Tesco’s Clubcard credit cards.
It pays a total five points per £4 spent in stores and an extra one point per £8 spent elsewhere.
Other popular credit card options that pay loyalty points include the M&S Reward Credit Card and Sainsbury’s Bank’s Nectar Credit Card range (for more on this see below).
Any other tempting offers?
Debenhams offers credit card customers exclusive offers instead
Debenhams is using a slightly different tactic to entice new customers.
It is offering anyone with a Debenhams Credit Card access to exclusive discounts of up to 20 per cent on its products online for the fist week as a customer, if you apply before October 29.
The credit card itself pays 3 points per £1 spent in stores and one point per £2 spent elsewhere. Every three months your points are converted into Rewards Vouchers.
New customers also get 500 points (worth £5) when they sign up.
Sainsbury’s Bank’s market-leading purchase credit card currently offers a 1,000 Nectar point boost when you spend £35 in store in the first two months, up to a maximum 10,000.
It also pays two loyalty points per £1 on Sainsbury’s shopping and fuel and one point per £5 spent elsewhere. Offer ends December 28.
Cardholders get 32 months’ 0 per cent interest, after that standard interest applies at 18.9 per cent APR.
M&S Bank recently launched a Reward Plus credit card that offers customers 2,000 points, worth £20 when they sign up, plus an extra 500 points when they make their first food, clothing or homeware purchase.
You also get double loyalty points on spends in store for the first 12 months.
The 0 per cent promotions are less generous though. It comes with six months’ 0 per cent interest on balance transfers (2.9 per cent handling fee applies) and purchases and a standard interest rate of 18.9 per cent.
The top frequent flyer card, the BA American Express Premium Plus credit card, currently comes with a tempting 25,000 Avios boost when you sign up and spend £3,000 within three months.
The card also gives a free companion ticket if you spend £10,000 a year and 1.5 Avios per £1 spent, but requires a £195 annual fee.
We recently flagged the Hilton Honors card, as picked by Rob Burgess, editor of popular frequent flyer and card perks website Head for Points, as a top reward card. It has no annual fee and to bag its sign-up bonus, you need to spend £750 in the first three months, which then gets you a voucher for a free weekend night at a hotel in the Hilton portfolio.
For anyone who prefers cashback, Amex’s Platinum Cashback card has a sign up promotion offering 5 per cent back on spending for the first three months.
After that you get up to 1.25 per cent back on spends but it comes with an annual fee of £25.
You can read more about these cards in our round-up here.
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS