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Should you get the new Tandem Money credit card – with no FX fees and 0.5% cashback?

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How does the idea of a free credit card which has NO foreign exchange fees and pays you 0.5% cashback on all your spending sound?

Tempting, I imagine, which is why we thought we would take a closer look at a new card product today even though it has nothing to do with ‘miles and points’.  With the closure of the Lloyds Avios Rewards credit card to new applicants, there is no longer a rewards card out there which has 0% foreign exchange fees when you are travelling.

Step forward Tandem Money.  This is another new(ish) challenger bank which runs its business via an app instead of outlets on the high street.

Tandem Money Credit Card

Tandem’s first product was a money management app, helping users to manage their money. The app pulls data from your bank accounts and calculates your available spending money by subtracting bills from the balance. It also warns users of higher bills and finds better deals.

The reason there hasn’t been a real banking product until now is that Tandem has had some bank licence issues.

Having initially gained a banking licence in 2015, Tandem lost it in March 2017 due to House of Fraser – of all people – pulling out of agreed funding due to issues with HOF’s new Chinese owners.

However, in January 2018 Tandem Money bought Harrods Bank (yes, Harrods had its own bank with a branch inside the store) and thereby got a bank licence back.  This allows Tandem Money to launch savings accounts in the future.

Tandem credit card

Tandem Money has now launched its first real product – a credit card with no FX fees and 0.5% cashback.

The Tandem credit card is a Mastercard and offers 0.5% cashback on everyday spending in the UK and abroad.There are no FX fees when you are travelling which save you 2.99% compared to the fees on the average UK credit or debit card.

In comparison, the Lloyds Avios Rewards card is the only loyalty credit card which doesn’t charge FX fees.  With the Mastercard you earn 0.2 Avios per £1 spent and with the American Express card 1.25 Avios per £1.  The Lloyds Avios American Express card remains the best deal for spending abroad but Tandem – with 0.5% cashback – is more attractive than earning 0.2 Avios on the Lloyds Avios Rewards Mastercard.

Tandem also imposes no fees for cash withdrawals abroad though you do have to pay interest from the moment you take out the money.

The Tandem cashback is added to your statement each month.  It genuinely could not be easier.

Conclusion

Let’s be honest.  With interchange fees of 0.3%, to me this credit card clearly seems financially unsustainable for Tandem, although Tandem claims that the credit card is profitable, and I’m assuming that this is just a way of luring in new customers. 

Tandem Money has a fixed term savings account in the pipeline which will exploit its new banking licence (you don’t need a banking licence to issue credit cards) and will be trying to get its credit card customers to eventually move their savings to Tandem as well.

Whether or not the card is unsustainable is not your problem though!  If Tandem is willing to run up large losses then you should take advantage of them until their funding runs out as your money is not at risk.

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Category

General

Comments (109)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Mikeact says:
    6 Mar6 March 08:03

    Was there not a comment that this card was primarily aimed at high risk users and that the mark left on your credit file may be detrimental?

    • Andrew says:
      6 Mar6 March 08:47

      The representative APR of 18.9% would suggest it isn’t being promoted at high risk users. It’s broadly similar to the representative rate of M&S, John Lewis & Virgin Money.

      Creation, who power the IHG Card, on the other hand is better known for their targetting of sub-prime customers through their “Aqua” brand at 35.9%

      • New Card says:
        6 Mar6 March 09:09

        I don’t think Aqua is a Creation brand. Aqua is owned by Vanquis Bank/Provident Financial.

      • Andrew says:
        6 Mar6 March 14:04

        Oops. Sorry. NewDay.

        Should know better, I doorstepped them at their Head Office when they were sending me marketing emails and mail (for sub-prime cards) without my consent.

    • New Card says:
      6 Mar6 March 09:08

      That suggestion related to the Aqua card, not the Tandem card.

  • Craig Strickland says:
    6 Mar6 March 08:19

    Application in, even if they load the exchange rate the cash back should compensate for that. As Rob states, I can only see this being a loss leader for Tandem, however, apart from hoping people will open a savings account I wonder what value the data will have when Open Banking comes in?

    • Andrew says:
      6 Mar6 March 09:00

      Value of data from open banking?

      Right now? None whatsoever from me. I’ve no issue with electronic banking, I’ve been using it since I had a Bank of Scotland HOBS terminal back in 1988, but I’m risk averse at having a single portal accessing everything across multiple organisations.

      In time, I can see Mortgage lenders insisting on access.

      • Craig Strickland says:
        6 Mar6 March 09:05

        None from me either, but if even 20% of applicants allow access to other accounts then that data has commercial value.

  • The_Pope says:
    6 Mar6 March 08:19

    “no FX fees” surely means the actual exchange rate is less favourable, no?

    • Rob says:
      6 Mar6 March 08:36

      No, because the translation is done by MC / Visa at standard rate.

  • Pangolin says:
    6 Mar6 March 08:23

    Isn’t the Post Office card also FX free? And one of the Barclaycards?

    • Scott says:
      6 Mar6 March 09:32

      Do those cards earn rewards? That’s the benefit of this card vs other FX free cards.

  • Mr Dee says:
    6 Mar6 March 08:41

    They auto declined me, would probably have used this for some 5 figure monthly spending too….

  • Rob says:
    6 Mar6 March 08:42

    Are they still available?

    • Grimz says:
      6 Mar6 March 09:55

      Nationwide CC has no FX fees

      • Alan says:
        6 Mar6 March 10:11

        Only for Euros though isn’t it? If you are spending outside teh EU they add 1% to the exchange rate (although they still call this fee free – but it does have a cost)

      • Alan says:
        6 Mar6 March 10:22

        There is also a fee for withdrawing cash overseas (unlike the Clarity and, apparently, the Tandem).
        I find this particularly useful with my Clarity card as it is the cheapest way to get cash for overseas spend.

      • Scallder says:
        6 Mar6 March 15:13

        My Nationwide CC is FX free everywhere. Their FlexPlus account (albeit at £13 a month, but as have a joint account gives us travel insurance, mobile phone insurance and European car breakdown) also has FX free cash withdrawals globally

      • Alan says:
        7 Mar7 March 08:07

        Its not worth the £13 a month for us. Due to pre-exiisting meds the travel insurance is worthless, I’ve never insured a mbile phone and I have only ever driven our own car in mainland Europe a couple of times.

        If these things work for you then it is a good account – just not for us.

  • Harry says:
    6 Mar6 March 09:47

    imagine the horror of former Harrods bank customers when they log into the millennial-pink tandem portal (check wayback machine for a chuckle)

    • Rob says:
      6 Mar6 March 10:12

      More seriously, this is an issue. Last year Harrods Bank was being very aggressive with its savings rates. Now, when you are playing with large sums, the £85k compensation number is meaningless. You fall back on the implied covenant of the parent and a lot of people will have taken a gamble that – if Harrods Bank had hit trouble – the Qatari Government, as owner of Harrods, would have bailed people out for reputational reasons.

      This is the same reason I have a chunk of cash in Tesco Bank because they have very high savings rates and I trust the implied covenant from the parent.

      Now your Harrods Bank savings account is with Tandem you have zero protection from a wealthy parent above £85k if Tandem runs out of funding. I don’t know if anyone who had a locked-in no-withdrawals savings deal with Harrods Bank was allowed to break it or not.

  • Grimz says:
    6 Mar6 March 09:58

    Yes I have this card!

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