Last year American Express increased the sign-up bonus on its Nectar credit card to an impressive 20,000 Nectar points. I thought it was worth taking a look at the card to see if it is worth adding to your purse or wallet.
Application link: American Express Nectar credit card
Key facts: No annual fee in year 1, £25 annual fee thereafter. £30,000 household income requirement.
The Nectar credit card has a representative APR of 25.0% variable, including the fee, based on a notional credit limit of £1,200. The interest rate on purchases is 19.9% variable.
If you want to check your credit record before applying for a new card, click here for a free 30-day trial of Equifax’s online credit report service. Note that a monthly fee of £14.95 will be charged if you do not cancel during the 30-day free trial period.
You should look at the two distinct aspects of this card – the sign-up bonus and the long term earning rate – separately.
There is no obligation to keep the card once you have spent the minimum required to receive the bonus, and the card is free for the first year in any event.
The sign-up bonus
The Amex Nectar card comes with a sign-up bonus 20,000 Nectar points, which is worth £100 when spent with most Nectar partners. Some Nectar deals are worth up to 1p per point (a list of the best value Nectar redemptions is here) which would make the sign-up bonus worth £200.
It is important to note that you need to spend £2,000 within three months to receive this – you do not receive it as soon as you are accepted for the card.
Before applying, you should think carefully about your spending plans for the next three months. Can you spend £2,000 easily? Remember that some small shops do not accept American Express so it is slightly more restrictive than a MasterCard or Visa.
If you think you may struggle, you may wish to delay your application until a time when you can predict a period of heavy spending ahead.
The American Express Nectar credit card comes with a £25 annual fee. For the first year, however, the card is free. This gives you 12 months to decide if you can spend enough on the card to justify keeping it long term. If not, you can cancel within the first year and will have paid nothing.
You will receive the bonus irrespective of any other American Express cards you hold. You will only be disqualified from receiving the bonus if you have cancelled a previous Amex Nectar card in the last six months.
The on-going earning rate
This is pretty good!
You earn 2 Nectar points for virtually every £1 you spend on the card. This is effectively 1% cashback and potentially more if you spend your points during a special Nectar promotion.
Unfortunately, Amex uses misleading language when describing the earnings rate on the website. It reads: “Collect up to 4 Nectar points for every full £1 spent at Nectar partners”.
This has nothing to do with the credit card. What they mean is that, if you shop is Sainsbury’s or Homebase, you would receive four points in total. Two of those points are the two that come from the credit card, but the other two are the points that Homebase etc will give your regardless of how you pay. I am not very happy with the way that American Express words this as it could give a misleading impression.
You need to have a £30,000 household (not personal) income in order to apply.
Do you usually pay interest on your credit card balance each month?
Please remember that you should only consider getting one of these cards if you clear your balance promptly every month and do not pay any interest to your card issuer.
This card is not designed for people who pay interest on their credit card balances because the interest rate is far higher than many other cards on the market. This page of the Moneyfacts site shows more suitable ‘low interest rate’ products if you search by ‘Low Standard Rate’.
you meet the £30,000 household income requirement
you can easily spend £2,000 within three months and
you pay off your credit card bill every month (because the interest rate here is high)
then I recommend taking a look at the American Express Nectar credit card. You will receive £100-worth of Nectar points for signing up – and they could be worth a lot more if used for a special promotion – and there is no annual card fee for the first year. As you can cancel the card without penalty before the fee for the 2nd year comes round, you have nothing to lose.Want to earn more Clubcard or Nectar points? Click here to visit the Shopper Points home page for the latest news and offers. Come back every day for new deals or join our email list.
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