Challenger bank Tandem has launched its long-awaited first product – and unlike rivals such as Monzo and Starling it’s a credit card rather than a current account.
The Tandem card rewards users with 0.5 per cent cashback on all spending, including while on holiday. Plus it comes with no fee for use abroad.
This makes it the only card on the market which offers fee-free spending and withdrawals abroad (avoiding a typical charge of 3 per cent each) in addition to money back on purchases.
Should you sign up? We take a look.
Tandem: Spenders earn 0.5 per cent back on any purchase over £1
What is Tandem?
Tandem is one of a new breed of challenger banks aiming to entice users by offering smarter online banking and purpose-built mobile apps.
It launched in 2016 having secured a banking licence from the Financial Conduct Authority in late 2015, but subsequently lost it after House of Fraser owner, China Sanpower Group, scrapped plans to fund the bank.
Following this blow, Tandem went on to acquire Harrods Bank, reinstating its banking licence and allowing it to plough ahead with the launch of its services.
Unlike rivals such as Monzo or Starling, Tandem has first concentrated on a credit card rather than a current account.
The new credit card will work with its banking app which offers personalised spending insights.
You can link existing current accounts through the app and pull in information from other banks. The app then allows you to set budgets, see where your money is going and get balance projections based on your regular bills and spending habits.
Ricky Knox, Tandem’s chief executive, said: ‘With our new banking licence, our banking app and our new credit card, 2018 is going to be a great year for Tandem. We are looking forward to getting our colourful cards into the hands of customers – I can’t wait to start seeing customers tapping around town’.
What the Tandem card offers
The card will pay a flat rate of 0.5 per cent cashback on any purchase above £1 both at home and abroad.
On a £1,000 monthly spend on the card after a year you would have clocked up £60 in cashback.
Any cashback earned will be automatically deducted from the amount you owe at each statement date.
A word of warning: Of course the more you spend the higher the rewards so these cards are designed to encourage you to spend more.
Remember though, any earnings will be quickly wiped out if you don’t clear your balance each month as the card charges 18.9 per cent APR.
Using the card abroad
There are no overseas transaction charges for using the card abroad to spend or withdraw cash.
However interest on all cash withdrawals (at home and abroad) is applied immediately, so you will want to pay it off as soon as possible.
As with most cards, if you pay off the full balance by the date show on your monthly statement you won’t be charged interest on purchases made both in the UK and abroad.
Tandem won’t load the rate and users receive the MasterCard exchange rate which tends to be more competitive than Visa’s.
Smart spending: The app allows you to pull in information from existing accounts to see spending breakdowns and balance projections
Other fees
If you use the card to withdraw cash at home there is a fee of 2.5 per cent (minimum £2.50).
Interest on purchases and withdrawals is 18.9 per cent APR, although you may be offered a higher rate when you apply depending on your credit score.
The best way to avoid interest is to set up a direct debit for the full amount each month. This also ensure you bypass the £12 late payment fee.
The card offers no balance transfer feature.
Is Tandem’s card any better than the rest?
There are few cards on the market offering cashback anymore.
The best cashback credit card on the market for a long time has been the American Express Platinum Cashback Credit Card that pays 5 per cent up to a maximum of £125 on spending for the first three months.
After that, if you spend up to £10,000 per year, you earn 1 per cent.
Spend more than that and you get 1.25 per cent on all spending. It comes with a £25 annual fee. Alternatively the free American Express Platinum Cashback Everyday card has no annual fee and pays 5 per cent up to £100 for three months and up to 1 per cent after that.
If you don’t want an Amex, there are a few options which pay around the 0.5 per cent mark, similar to Tandem.
Nationwide pays 0.5 per cent cashback on any spends on its Select Credit Card, offered exclusively to its Flex Account range customers.
Another useful perk is you won’t pay commission on any purchase made on the credit card while abroad.
This is the closest rival to Tandem, however unlike the challenger, with Nationwide there is a 2.5 per cent cash withdrawal charge plus you have to be an existing current account customer to apply.
Similarly Aqua’s Reward credit card offers 0.5 per cent cashback and free overseas spending – but there is a cash withdrawal fee of 3 per cent (minimum £3).
The card is geared towards those with a less-than-perfect credit rating offering lower entry requirements, but hand-in-hand with this is a higher APR of 34.9 per cent.
If you just want a good card for spending abroad and are not worried about cashback one of the most popular options is the Halifax Clarity Credit Card.
You can read more about the best cards for spending abroad in our full round up here.
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS