Sainsbury's £5 worldwide family travel insurance loophole

The Sainsbury's Gold Card charges accepted new cardholders £5 per month for a range of features: chiefly, travel insurance which covers two adults (under 65) and up to six children worldwide, including up to 17 days of winter sports per year (see the Travel Insurance guide).

For a full year this would cost £60. However, Sainsbury's has confirmed the travel insurance kicks in immediately and there is no minimum time you must hold the plastic for.

This means if you plan in advance, you could grab the card before you go on holiday so you're fully covered, then cancel when you get back unless you need to make a claim. Although to be covered in case of cancellation of your trip, you'll need to have an insurance policy in place at the time of booking.

If you time it right, you may only have the card for a month, thus slamming down the cost.

However, even if you hang onto the card all year, this is a decent price for insurance, especially for older travellers.

One negative with that route is you can't pick and choose when your policy starts - you are continually paying. With standalone insurance, you can let it expire, then get a new policy for your next holiday.

The cheapest normal worldwide family policy is £54/year from Insurefor – via price comparison Moneysupermarket – or £74 from Virgin if either adult is over 60.

Even a single-trip policy for a family of five going to New York for two weeks can cost £42.

To get the Sainsbury's card, you must pass a credit score. Don't apply if you'll need cheap credit to cut the cost of debts in the near future, or have recently been turned down by other card providers.

What else does the card give?

It has a number of useful features – though on their own, they aren't worth the £60/year price tag.

• No fees for spending abroad. Ignoring the £5 monthly fee, this is the cheapest card to use while on holiday, so if you get it for the travel insurance you may as well use it for that.

  It charges no 'load fee' every time you make a purchase (most charge 3%ish), no fee for taking cash from an ATM, and it doesn't even charge interest on cash withdrawals if you pay the monthly balance off in full.

  On £100 of spending and £100 of cash withdrawals abroad, Sainsbury's would be around £10 cheaper than using a normal credit card. See the full Cheap Travel Money guide for how this compares.

• Low-ish standard rate. Sainsbury's Gold Card charges 9.9% APR interest on all purchases and balance transfers (though a big 24.9% on cash withdrawals). However, this can be beaten by Barclaycard Simplicity at 6.8% and Halifax Easy rate at 6.9% (read the Cheap Spending Cards guide).

  Also, once the £60 annual fee is factored in, the APR jumps to an uncompetitive 18%.

• Extra Nectar rewards. If you use this card to shop at Sainsbury's (including petrol) you can earn double Nectar points.

Is the travel insurance any good?

This is a new policy; not the one Sainsbury's sells separately. The cover levels match the minimum MoneySavingExpert.com requires to list in the top picks in our Travel Insurance guide.

Importantly, it has an excess of up to £150 so you may have to pay the first £150 of any claim.

The maximum age of 65 for the two adults allowed on the policy is standard. However, this offers good cover for children, with the standard maximum age of 16 hiked to 23 if they are still in full time education.

In total, 17 days can be spent doing winter sports, while the maximum duration allowed for any one trip is 24 days.

As this is a new policy, insurance rater Defaqto is still assessing it, and we will add its statement once available.

Further reading/Key links

See the full spec: Sainsbury's Gold CardFind the cheapest cover: Cheap Travel InsuranceBeat overseas spending charges: Cheap Travel Money