Egg's cashback credit card tempts online shoppers

Internet bank Egg this week unveiled a credit card that offers extensive benefits to web-savvy shoppers but, with a 17.9% APR, it will only suit those who pay off the balance every month. The bank claims the card gives a typical 10% cashback at more than 1,500 retailers via its Egg Cash Back Superstore. The store is run by Quidco , one of a proliferation of websites that has sprung up over the past few years offering people cashback deals when they spend with selected retailers. They include 3% on most purchases at Marks & Spencer and 5% at iTunes. David Black at financial research company Defaqto describes the new reward scheme as "a pretty good deal". However, he adds: "As a rule, only people who clear their outstanding balance every month should choose a credit card on the basis of any rewards offered. Those who don't should concentrate on the interest rate because this will generally outweigh any potential rewards." The card has an interest rate of 17.9% for purchases, which is 1% more than for existing Egg Visa cardholders, who will also be able to access the rewards from the Egg cashback superstore. As an introductory offer, there is no interest to pay on new purchases until September 2010 for new card holders, and 0% on balance transfers until August next year (with a 3% balance transfer fee). While the range of retailers on offer might appeal to some shoppers, Andrew Hagger of price comparison website moneynet.co.uk thinks that most people would be better off with a card that rewards them for loyalty to a single retailer. This year has seen what appears to be the start of a resurgence in reward cards. Earlier this year, Sainsbury's launched a Nectar credit card , which gives 1 Nectar point for every £5 spent, while Barclaycard launched its own reward scheme, Freedom . This allows cardholders to earn what the bank calls "reward money" at 30,000 retail outlets, including Shell petrol stations and Pizza Express restaurants.