Get Cash Back on Credit Cards

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What You Need to Know

  1. Cashback Credit Cards work just like normal Credit Cards, except they will pay you an agreed amount of Cashback on purchases you make using the Card.
  2. Different cards offer Cashback in different ways with the most common being a tiered arrangement depending on the amount you spend, different rates depending on where you spend it, and a more straightforward flat rate.
  3. Introductory rates are also often available for a set period when you sign up, which are a great option if you know you have some big spending coming up in the near future.
  4. Cashback will be paid onto your account on an annual or monthly, but only a few cards will let you transfer it into another bank account.
  5. To make the most of your card it is important to use it as much as possible to ensure you maximise the amount of Cashback you can earn, although beware some cards do come with spending limits.
  6. The golden rule is to always pay off the full balance each month, as many Cashback Credit Cards carry higher than average interest rates.
  7. Before signing up, work out how you will be using your card and therefore what is the right type of card for you. Our Credit Card Comparison page has all the best offers currently available to help you make the right choice. 


What is a Cashback Credit Card?

Cashback is a means by which you can earn money every time you make a purchase. A Cashback Credit Card is therefore a card which agrees to pay you a certain amount of money each time you use that card. The amount they pay will be dependent on the offer connected to each card.

For example, if you have a Cashback Credit Card which offers 1% cashback on everything you buy on that card, each time you spend £100 on your Card, you will be given £1. They are therefore rewarding you for using your Credit Card as much as possible, and in doing so, incentivising you to use it as well.

Aside from the Cashback offer, Cashback Credit Cards work like any other Credit Card. You can use them as you wish up to your agreed credit limit, and if you do not clear the balance each month, you will be charged interest on your balance.

However in general, cashback Credit Cards tend to have a higher interest rate than regular credit cards, and they can also come with an annual fee as well.

How Cashback Credit Cards work

There are a number of different types of Cashback Credit Cards, which can work in different ways.

Some Cards come with an introductory offer, meaning that for a set period of time they offer a higher rate of cashback before dropping back to a default amount. This type of card is ideal if you know you are about to make some big purchases as they will give you a higher rate of Cashback on what you spend. Introductory offers can be as high as 5%.

Some Cashback Credit Cards will offer cashback on a tiered payment system. This means that will pay you more in Cashback if you spend more on your card. An example of how they might work would be to offer a Cashback rate of 0.5% on all purchases in a year up to £2,500, then 1% on anything between £2,501 and £5,000, and 1.5% on any amount over £5,001.

Other cards will offer different Cashback rates depending on where you spend your money. So for example the same card might offer to pay you 1% cashback on anything you spend in a supermarket, 1.5% in other high street stores, and 2% when spending online. The rates and types of spending favoured will vary from card to card.

Other cards will just offer you a flat Cashback rate. The most common rates on offer are between 1% and 1.5%, but it is occasionally possible to find something higher.

The way you receive your cashback can also vary from one card to another as well. Some will credit your account on a monthly basis while others will do so annually. Most cards will only allow the money to be put back on the card, meaning you will have to spend it on your card rather than using their credit. A few do allow it to be transferred off into another back account though.

However some cards will also offer payment through vouchers rather than money, which may restrict your spending of the Cashback you earn to certain items or stores.

Details of how you receive your cashback will be laid out in the Cards rules, and this is just one reason why it is very important to read all of the paperwork carefully before signing up for a Card.

How to get the most out of a Cashback Credit Card?

The appeal of making some money back when you use your credit card is obvious, but the reality is that if you only use your Credit Card for occasional purchases, the cashback you will receive will be minimal and the risks of incurring the higher rates of interest and annual fees makes using a Cashback Credit Card unviable.

To get the most out of a Cashback Credit Card, and to make it worthwhile having one, you must be sure to follow two golden rules:

  1. Use the card as much as you can.
  2. Always pay off the full balance each month.

To make it a worthwhile investment, especially if you are paying an annual fee, you have to use a Cashback Credit Card as often as possible. This means every time you make a purchase you turn to your card rather than cash or a debit card. This way you will quickly start to build up a meaningful amount of Cashback.

If you don’t intend to change your spending habits in this way, don’t opt for a Cashback Credit Card, as there are better value cards available for occasional spenders.

But it is also important to remember that Cashback Credit Cards often carry higher than normal rates of interest. It is therefore important to pay off the entire balance every month, as incurring interest payments can quickly wipe out the value of any Cashback you have earned.

It is strongly advisable to set up a standing order to pay off the full amount automatically so you don’t even run the risk of forgetting to do so.

Equally, it is also important not to spend more than you can afford. It can be easy to forget how much you are spending when it is all on Credit Card, but it is important that, come the end of the month, you have enough money available to clear your account.

How to choose a Cashback Credit Card

If you have made the decision that getting a Cashback Credit Card is the right option for you, the next choice to make is which one is the right card for you.

The first consideration will be the way in which Cashback can be earned, and the Cashback rates on offer. If you are expecting to spend a lot over a short period of time, it is worth seeking out a card with the best introductory offer.

If you intend to make changes to how you pay for many of your items, then you should give some thought to where you usually spend your money. If you tend to spend more in supermarkets, or online, try to seek out a card with a higher rate for spending in the same places. Also take a look at any spending caps, such as an annual limit, your potential cards might have, and make sure this isn’t lower than the amount you usually spend.

Make sure the Cashback will be received in a manner you want it. If you are going to get the Cashback in vouchers, make sure they are for a store you use regularly, or a product you buy a lot.

There are then the broader considerations to take into account as well, such as the annual interest rate, the balance transfer offers, and any other benefits the card may have with it as well.

Whilst you can narrow down the type of card you will benefit from the most, it is well worth visiting a comparison site to find the best deals currently on the marketplace. Our Credit Card comparison page offers the best Cashback Credit Card deals currently available, along with our recommendation of the best offer currently available.


Further Reading

  • As well as Cashback Credit Cards, you might also want to take a look at the best Rewards Credit Cards currently available.
  • To see all of the best Credit Card deals currently available on the market take a look at our Credit Card comparison pages.

Find out about the Companies that provide Credit Cards with our Top Credit Card Services site


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