Asda signs up to credit card war

ASDA is pitting itself against rivals Tesco, Sainsbury and Marks & Spencer by launching its own-brand credit card.

The group, owned by US retail giant Wal-Mart, already offers home, motor and travel insurance, but this will be its first foray into the personal banking sector.

The card, which will use the MasterCard network, is being backed by financial services company GE Capital, which also supplies Wal-Mart's own credit card, used by 11 million people in America.

Tests of the card began last week in two stores, near Bristol and in South Wales. If the trial is successful, it will be available in all 265 stores.

Rates, which will depend on individual customer's credit history, are likely to range between 13.8 and 28%. Asda justified this as being 'more inclusive' and giving customers 'the chance to build a strong credit rating'.

Unlike rivals, Asda is not planning to introduce a loyalty points scheme on its card, but customers will get cashback of one% of any purchases in Asda stores and 0.5% for all other purchases.

Wal-Mart is known to be keen to push further into the financial sector. Two years ago, it hired Jane Thompson, a former McKinsey, Procter & Gamble and Sears executive, to lead a big expansion in its financial services worldwide.

However, Asda said that it had no plans to expand into loans and saving accounts.

In the UK, 58 million credit cards have been issued by 64 providers. Personal borrowing is at a record £168 billion, of which £50 billion is card debt.