Aqua Reward credit builder credit card offers 3% cashback
Aqua's innovative credit-building card gives those with bad or little credit history a 3% cashback reward for responsible borrowing.
There are two things you would have noticed if you've ever looked at credit builder cards before. One is that they have pretty high APRs and the other is that they are typically no-frills.
Credit builder cards are designed to help those who are new to credit or are trying to repair a damaged credit rating. Typically these people may have already been turned down when trying to borrow money through a credit card or personal loan. That’s why they turn to these cards.
But just because these borrowers are excluded by high street lenders, should they be excluded from the best deals? Well, no. There is a serious task at hand but that doesn’t mean it can’t be incentivised.
The Aqua Reward card redresses this balance and uses the carrot and stick approach to get people to become better borrowers.
The Aqua Reward Credit Card pays 3% on all card purchases annually. But the amount of cashback that can be made is capped at £100 each year.
You will get your cashback at the end of the year as long as you do not exceed your credit limit and make your minimum monthly payments on time.
The Reward card comes with a manageable credit limit of between £250 and £1,600 depending on your circumstances. There’s a 24-hour helpline, text message payment reminders and online account management. Plus you can even use the card abroad for free.
The APR on offer is 34.9%. As with all credit cards this advertised rate is only available to the top 51% of those that apply. The other 49% will be offered something much worse.
With the Aqua Reward Card if you have a particularly dodgy past the rate could be as much as 49.9%!
Typically the APRs on credit builder cards are frighteningly high, but if you use the card properly and pay off what you spend each month you won’t pay any interest on what you borrow. So this shouldn’t put you off taking one out if you need to.
Some more prudent borrowers may view this cashback offer as a bit controversial.
Given the card is designed to help people prove they are responsible with money, is the cashback offer perhaps tempting them to overspend in pursuit of rewards?
Aqua says that sensible spending and responsible account management deserves to be rewarded.
The lender told us its research had shown that capping the cashback at £100 a year would stop people trying to spend more in order to make more. Instead the cap encourages affordable regular spending to help borrowers get the largest reward.
Spending around £275 a month means you will get the maximum cashback of £100 at the end of the year. That doesn’t seem like overspending when you think those purchases could be for regular outgoings like food shopping and travel.
Cashback is not payable if you miss a payment or exceed your credit limit. So it's in your best interest to pay it off in order to receive the reward at the end of the year.
Personally, I think rather than tempting borrowers into bad habits the incentive on offer will make borrowers more focused on doing their best and feel more valued as a customer.
Rewarding credit builder cards
Aqua Reward offers the best of both if you are looking for a strong credit builder card and a pretty competitive cashback card.
In comparison to other credit builder cards the Aqua card has a lot more pizazz. The only other cards I could find in this range with any rewards apart from Aqua were the Granite Credit Card and the Capital One Classic Extra.
The Capital One Classic Extra offers 0.5% on all spending and there is an opportunity to get a £10 bonus added to this amount at the end of the year by paying on time.
The Granite Credit Card adds a bit of variety to the mix with discounts in shops and restaurants rather than cashback. There's also the possibility to get a limit of £3,000 if you manage your account well.
For a more in depth review of the entire credit builder card range check out top credit cards for poor credit.
Other cashback cards
So how does the Aqua Reward stack up against the behemoths in cashback credit cards?
Well, the American Express Platinum Cashback Card has an introductory 5% cashback offer on your first £2,000 spent within three months. But after that the rate drops to 1.25%. The card comes with an annual fee of £25, an APR of 18.5% and you must have an income of £20,000 as well as an excellent credit history to be considered.
The Capital One Aspire World also has a table topping 5% three month introductory rate on offer, which is again capped at £100. The card offers tiered rates of cashback after that depending on how much you spend, with a top rate of 1.25%.There is no annual fee to pay and the APR is 19.9%.
The Santander 123 Credit Card offers up to 3% cashback through a tiered system. You get 1% back on supermarket spending (plus at the moment an offer for 1% on spending in major restaurants and bars), 2% is paid for purchases in department stores and 3% is paid at petrol stations. Unlike the other cards the cashback is credited each month rather than every year. The borrowing APR is 18.9% and the annual fee is usually £24 but is free until the end of December this year.
The Aqua Reward card, unlike these top cashback credit cards, has no introductory offer for a couple of months followed by a naff cashback rate, no restrictions on where you can obtain cashback and no annual fee to pay for the privilege.
How to use a credit builder card effectively
A credit builder credit card is a lifeline for those with a dodgy or a non-existent credit past. But they will only work to improve a credit rating if used properly. This is typically achieved by meeting the minimum balance repayments on time each month and never exceeding your credit limit.
But if you really want to make an impression you should try and clear the balance each month, to avoid being hit by the massive rates of interest these cards tend to have.
One of the best ways to make sure you don’t slip up is to put your regular spend on things like food or petrol on the card, put the money you would normally spend on these things aside, then pay off the credit card in full when your bill arrives. This way spending on plastic won’t cost you anything extra.
It may even be a good idea to set up a direct debit payment to ensure you clear the balance each month and don’t forget.
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