Borrowers with a bad credit history can now get cashback on a credit card for the first time.
The Capital One Classic Extra card gives 0.5 pc cashback on all spending, with no maximum limit. It also rewards card holders with a £5 bonus when they open their account. Cashback is credited every January.
But unlike most cashback cards, borrowers do not need a perfect credit history to stand a chance of being accepted. So-called credit-repair cards such as this are specifically aimed at people who may have struggled with debt in the past.Cashback: The Capital One card that offers cashback and builds your credit history
The idea is to use the card to build up a history of using credit responsibly, making it more likely you will be accepted for a mainstream credit card, loan or mortgage in future.
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Credit-repair cards tend to have high interest rates and low credit limits of, say, £1,000. The Capital One card has a typical rate of 34.9 pc and credit limit of up to £1,500.
Louise Holmes, spokesman at comparison site Moneyfacts, says: ‘This new card from Capital One should prove popular, as it is available to all cardholders.
‘As with all credit cards, consumers must monitor their spending and be careful to pay off their balance in full each month. Never just pay the minimum repayment, as the interest will wipe out any benefits from the cashback.’
Other good credit-repair cards include the Barclaycard Initial Visa at 29.9 pc, and the Vanquis Bank Granite card at 34.9 pc.