Asda Money has launched a new credit card which can help you improve your credit score and earn rewards when you shop.
The Asda Money Select Credit Card is a credit builder card, offering the same benefits as its mainstream card (the Asda Money credit card), but with a much higher APR of 34.9% (variable).
The card, from Asda Money and Jaja Finance, means shoppers with a low credit score - who may find it more difficult to be accepted for other credit cards - could be eligible, and get cashback on their shopping, which can then be converted into vouchers to spend in-store and online.
Here, Which? takes a closer look at what the new credit card offers, and how it compares to other credit builder cards on the market.
How does the Asda Money Select Credit Card work?
This credit card, launched with Jaja Finance, aims to help you boost your credit rating, and there is no annual fee.
It offers 1% cashback in ‘Asda Pounds’ when you use your card to buy groceries, fuel and other Asda services. You can also earn 0.3% cashback spent elsewhere.
Asda Pounds can be transferred into your Asda Rewards Cash Pots to be spent at Asda in-store or online.
The card has an APR of 34.9% (variable) with an assumed credit limit of £1,200. However, the APR could go up to 43.4% depending on your individual circumstances.
The minimum credit limit you could be given is £500 and the maximum £5,000 - but again, this depends on factors such as your credit score and income.
- Find out more: how to improve your credit score
How to use Asda Rewards
Shoppers will be rewarded through Asda’s loyalty programme 'Asda Rewards', which launched earlier this year.
To get the cashback you've earned, you’ll need to download the free Asda Rewards app and link it to your credit card.
Your Asda Pounds can then be spent by moving them to your 'Cashpot' and converting them into an Asda voucher, which can be scanned at the checkout on your mobile.
The app also has other ways you can earn rewards. For example, shoppers can earn Asda Pounds by scanning items, buying star products and completing ‘missions’ - such as buying a certain number of items from one department.
It's also worth noting that Asda was revealed the cheapest supermarket in our latest analysis, when comparing the cost of a trolley of 148 items across the big six 'traditional' supermarkets.
- Find out more: how Asda Rewards works
Who is eligible for the Asda Money Select Credit Card?
Before you apply, you should check your eligibility to see the credit limit and interest rate you’ll be offered, without it affecting your score.
To apply, you must be aged 18 or over and a UK resident. Credit is subject to status. You'll need details of your income, any financial commitments and your last three years of address history when you apply.
You’ll also need to register for an account with Asda. You can do this when you apply, or on Asda’s website before.
- Find out more: how to check your credit score for free
How does the Asda Money credit card compare?
Here’s how the Asda Money Select Credit Card compares against other credit builder cards on the market which offer other perks, such as reward points or free subscriptions. We have listed them in order of APR.
| Credit card provider | APR | Other perks |
|---|---|---|
| Tesco Bank Foundation Credit Card | 27.5% (variable) | Earn Clubcard points - five points for every £4 spent in Tesco (including Tesco fuel), and one point for every £5 spent elsewhere. |
| Barclaycard Forward Credit Card Visa | 33.9% (variable) | Your interest rate will reduce to 3% if you make all your payments on time for the first year, and 2% in the second year. 0% interest on purchases for three months from the date you open your account. Get up to five months of Apple Music, Apple TV+, Apple News+ and Apple Arcade for free. |
| Asda Money Select Credit Card | 34.9% (variable) | Get 1% cashback in ‘Asda Pounds’ when you use your card to buy groceries, fuel and other Asda services. It offers 0.3% cashback spent elsewhere. |
Information correct as of 10 November 2022
In terms of the rewards on offer, the best card for you depends on where you shop/which services you might make use of. The card from Asda Money has the highest APR, but if you pay off what you owe each month then you won't be charged interest on what you spend.
If you have a good credit score, but you’re interested in earning rewards, you would be better off applying for its existing card - the Asda Money Credit Card. Read our news story to see how it compared against other supermarket reward cards.
- Find out more: best cashback credit cards
What is a credit builder card?
Credit cards for 'bad credit' are designed for those who aren’t eligible for mainstream credit cards because they have a poor credit score, or no credit history - also known as a 'thin' credit file.
You might have a thin credit file if you've never had a credit card, or borrowed money before - so lenders won't know how well you can manage your money.
A poor credit score means you're a riskier prospect for lenders, which is why credit builder cards tend to have lower credit limits, higher interest rates and fewer benefits than other credit cards. However, they can still be a useful way of allowing you to build – or rebuild - your credit rating, if used sensibly.
- Find out more: best credit cards for bad credit
Top tips for using a credit builder credit card
For those who want to improve their credit rating, you'll need to be careful how you use your credit card. Here are our top tips:
Always pay in full
Paying your balance off in full and on time every month will mean you avoid interest being added to what you owe, and will also mean you'll build up a record of successfully managing credit to improve your credit rating.
If you don’t keep up with minimum repayments, you could lose any promotional offers, be hit with a fee and your provider will report your missed payment to the credit reference agencies, reversing any good work you might have done.
If you're likely to forget when payments are due, set up a direct debit to ensure that your minimum payments are met in advance of the credit card payment date.
- Find out more: how to pay off your debts
Stick to your limit and avoid borrowing
Because credit builder cards are aimed at higher-risk customers, APRs tend to be very high, so you should never use them to borrow over the long term.
You should also check your credit score every few months to see if your score has improved, and where you stand in the eyes of lenders.
- Find out more: how to check your credit score for free
Check the Which? Recommended Providers
If you’re looking to take out your first credit card, or want to switch, you can see how 25 of the biggest providers fared in our analysis of the best and worst credit card providers. Those that scored highly with customers, and passed our product analysis, have been awarded Which? Recommended Provider status.
You can also have a look at our individual credit card company reviews for more detail on how customers rated brands for their services.
source https://www.which.co.uk/news/article/asda-money-launches-new-credit-card-to-help-boost-your-credit-score-aJ1M41A8tePg