Many providers offer reward credit cards nowadays. These are most beneficial to people who are likely to use their cards in a high number of different stores as rewards come in the form of collecting points as you spend. This means that the account holder can receive money off a wide variety of products. If you are likely to spend a lot on your card, then cashback credit cards may be worth looking into. These give cardholders a yearly percentage back of everything that is spent on the card, usually in the form of a cheque or refund to your account.
|Rewards||Cash-Back Reward Program||Purchases||APR Representative (Variable)|
|Cashback||The maximum cashback reward is 6.00% available during the first three months (on your largest 5 monthly transactions) subject to a maximum of £120 cashback during this period (conditions apply), reverts to 2% per month on the 5 largest transactions (subject to minimum 15 transactions that month).||n/a||24.8%|
|Rewards, Shopping||No Cashback||n/a||18.9%|
|Rewards, Shopping||No Cashback||n/a||12.9%|
|Cashback||5% for first 3 months||
|Cashback||5% for first 3 months||n/a||7.8%|
||Clubcard Shopping||No Cashback||
|A guide to Cashback and Rewards Credit Cards|
Put to best use, the way to obtain maximum cash back is to place as much of your monthly expenditure as possible on your card.
More for your money
Pay off your cashback credit card every month and this will give you a period of free credit with a cash incentive. Reward cards are also popular and AirMiles or travel points can really add up.
Cash back credit cards give you money back as you spend. Lenders offer anything from 0.5% upwards to 1%, 2% or even 3% on your total spending for the year so it is worth shopping around for the best cash back deals.
The way to make this really work is if you pay off your credit cards in full every month. By putting as much of your allocated monthly purchases on the card and paying the balance off every month, you effectively make money while spending.
If you aren’t likely to pay off your monthly balance the advantages of the cash back will probably be wiped out by the interest that you’ll be paying on the remaining balance. In this case there is a better credit card out there for you, such as a low interest for the life of the balance or 0% interest for a limited amount of time.
A nice little bonus
Put to best use, the way to obtain maximum cash back is to place as much of your monthly expenditure as possible on your card. This could result in a nice little bonus; if you take a spend of £500 every month at a rate of 1% you will receive yearly cash back of £60. It might not seem like a lot but it is an effective way to make your money work harder for you.
Most cash back credit cards work by refunding a percentage of your entire spending once a year. This is usually credited to your account.
Charity begins at home
If you want to donate your cash back to charity and find that the cash back rates are better than those on charity cards it is simple to use your card to make a donation, in the same ways that you might use the card to pay for anything else. If you do it through Gift Aid your money will go even further, as Gift Aid treats donations as if the donor had already deducted basic rate tax from them. The charity can reclaim this tax to increase the value of a donation.
The small print
As with any credit card it is prudent to check out the details of the cash back offer. Some offer a good introductory rate, which is scaled back down after an initial period. Others pay more, the more you spend, or may cap the amount that is paid. The way to get the most out of this type of card is to choose one that is tailored to the way you spend.
The majority of credit card companies offer cards with loyalty or reward schemes such as AirMiles or travel points. If you collect enough you can get a free flight or cruise and although these cards don’t earn you cash, they can save you the money you would have spent on travel.
If you use your cash back card alongside store loyalty cards such as Boots Advantage, Nectar and Tesco Clubcard you can also earn extra rewards. But don’t be fooled into spending more than you originally intended just to gain extra rewards - this is just a false economy.
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