Compare the best cashback and reward credit cards – October 2021

23 min Read Published: 03 Oct 2021

5 things to check on any 0% balance transfer credit card offerWhat is a cashback/reward credit card?

A cashback or reward credit card enables you to earn cashback or rewards as you spend. Every time you make a purchase on the card, you can earn rewards and/or cashback at the rate advertised by the card provider. The rewards points or cash you earn are generally paid as credit on your card balance or issued as vouchers. This can be done either monthly or annually.

Ideally, you would treat a reward or cashback credit card in the same way as you would a debit card, using it to purchase essentials, as well as your usual discretionary monthly spend. It's vital to make sure you pay off the balance in full each month to avoid paying interest on your spending, which could easily wipe out the rewards you earn.

If you're looking for a card to make new purchases (outside of your usual monthly spending), read our article "Compare the best 0% purchase credit cards". Alternatively, if you want to see our pick of the best of credit cards in the market, read "Best credit cards in the UK".

How do cashback credit cards work?

A cashback credit card works by allowing you to earn a percentage of your spend back. They tend to have a cap on the maximum amount you can earn in cashback, with the total amount credited to your credit card balance either monthly or annually. You can generally earn cashback on all spending on the card, with some cards offering a higher rate for a limited introductory period or if you go over a certain annual spend.

Cashback credit cards tend to have less competitive APRs, which means it's even more important to pay the balance off in full each month so you don't have to pay interest. You also need to make sure you're only using the card for your normal day-to-day spending and don't start building up excess debt.

For a more detailed breakdown of everything you need to know about cashback credit cards, read our article "Which are the best cashback credit cards UK? Earn while you spend".

How do rewards credit cards work?

Unlike cashback credit cards, rewards credit cards tend to be more limited as they generally only provide you with rewards that can be redeemed against purchases with a specific retailer or company. For example, you may have a rewards credit card that allows you to earn air miles, Nectar points or vouchers for a certain store. Again, you should be able to earn rewards points on all of your spending, but they tend to offer extra points for spending with the retailer it is associated with.

It pays to choose a reward credit card that best fits in with your lifestyle, whether you're a frequent flyer or are loyal to a particular supermarket or brand. It is also worth comparing the relative value of the points cards offer as some have a higher comparative monetary value than others.

We have a complete guide to reward credit card in our article "Which are the best rewards credit cards in the UK?"

How to choose the best cashback or reward credit card

When you are considering which is the best cashback or reward credit card for you, you will need to weigh up the features it offers, including:

Reward/cashback deal

You need to choose a card that fits in with your normal spending habits to make the most of the rewards or cashback it offers. For example, if there is a minimum annual spend required, you need to assess whether it is realistic you are going to meet it. In addition, you need to balance any initial introductory offer with the long-term benefits it offers - while 3% cashback for 3 months may seem attractive, it is not as good as 1% cashback for 12 months.

As previously mentioned, you should also compare the relative value of the reward on offer, as well as making sure you going to make maximum use out of the card.

Annual fee

The most competitive cards in the market with the highest cashback or rewards can often have a high annual fee. You need to assess how much you are likely to earn on the card in cashback or rewards and see if it justifies paying the fee. At the same time, there are a number of fee-free options that still offer good levels of rewards, so if you are not sure how much you are likely to use the card and don't want to risk having to pay out a high annual fee, this may be a better option for you.

Interest rate

The representative APR on cashback and reward credit cards tends to be higher than for other types of cards. The best way to avoid this being an issue is to ensure you pay off the full balance each month as this means you won't have to pay any interest at all. It is wise, however, to take into account the APR on the card you choose just in case you do end up carrying over some of the balance because of an unexpected change in circumstances later down the line.

Additional perks

As well as the reward or cashback on offer, these cards can sometimes provide other benefits, including discounted tickets to live events, free travel insurance, no foreign usage fees or airport lounge access. Again, it is necessary to work out whether you are likely to make full use of these perks and how they fit in with the other features of the card. Depending on how you use it, it may be better to have a higher overall cashback rate, for example, rather than the ability to access exclusive tickets to concerts and shows.

Which are the best cashback credit cards - October 2021

Having fully assessed the current market, here are our top-3 cashback credit card picks, based on the cashback rate, fees, APR and other perks and benefits:

Card name  APR Annual fee  Cashback rate Cashback on annual spend of £5000
 

American Express Platinum Cashback Everyday 

24.5% variable £0 5% (up to £100) in the first three months.

Ongoing rate of 0.5% up to £10,000 per year, 1% over £10,000

£25 (after introductory offer)
 

Santander All in One

23.7% variable £36 0.5% £25
 

Barclaycard Rewards

22.9% variable £0 0.25% £12.50

 

American Express Platinum Cashback Everyday credit card American Express Platinum Cashback Everyday 

While American Express is the undisputed champion of both cashback and reward credit cards, offering the highest reward rates on the market, this card stands out because it doesn't levy an annual fee, unlike many other cards in the Amex range. It has a high initial cahsback rate for the first three months, but continues to offer a market-beating rate after that.

There is no limit on the amount of cashback you can earn in a year and there is also the additional bonus of travel accident insurance and Global Assist, which provides round-the-clock support if you need help when you are abroad. American Express Experiences also gives cardholders priority access to concerts and other live events.

For details on other American Express cards, read "Which is the best American Express credit card?"

 

Santander All in One Credit Card Santander All in One

The Santander All in One card often appears on best credit card round-ups because of the fact it offers 26 months interest-free on balance transfers and 20 months on purchases. However, it is also worth considering if you are looking to earn cashback as it provides a good standard rate, as well as the potential to earn extra cashback with selected retailers. On top of that, it also has no foreign transaction fees on purchases in local currency for those travelling abroad.

The downside with this card is it does attract a £36 annual fee. However, if you are planning to make use of the balance transfer deal, the fact there is no balance-transfer fee, coupled with the savings you will make by moving over any existing debt, soon justifies the cost or having the card.

You can read our full review of the Santander All in One credit card here.

 

Barclaycard Rewards credit card Barclaycard Rewards

The Barclaycard Rewards credit card stands out for offering a reasonable cashback rate with no annual fee. It has the added benefit of not charging any foreign transaction fees when you use the card abroad, both on purchases and ATM withdrawals. It also gives cardholders access to exclusive tickets to events through the Barclaycard Entertainment scheme.

For more details, read our "Barclaycard Rewards credit card review".

  

Which are the best reward credit cards - October 2021

Having completed a full review of the best reward credit cards here are my top 3:

Card name  APR Annual fee Rewards rate  What is reward worth? 
 

American Express Preferred Rewards

59.9% £140 (£0 in first year) 1 point for every £1 spent, 2 points for airline and foreign currency purchases 1 point = 0.5p for shopping vouchers

1 point = 1 Avios

Airmiles/hotel point values vary

 

Amazon Platinum

21.9% £0 3 points for every £2 spent on Amazon with Prime

1.5 points for every £2 on Amazon without Prime

0.5 points for all spending elsewhere

1000 points = £10 Amazon gift card
 

M&S Rewards 

19.9% £0 2 points for every £1 spent in M&S in the first year, 1 point in subsequent years

1 point for every £5 spent elsewhere

100 points = £1 M&S voucher

 

American Express Preferred Rewards credit card American Express Preferred Rewards

As previously stated, there are a range of very attractive rewards and cashback cards from American Express, as detailed in our round-up of the best American Express cards. However, this card stands out because of the sheer flexibility of how you can "spend" you rewards points. This includes using the points with 12 airline loyalty programmes, including British Airways Executive Club, Emirates Skywards and Virgin Atlantic Flying Club. You can also opt to pay with your rewards points with selected retailers, including Amazon and Ticketmaster. Added to that, you get two complimentary airport lounge visits per year, as well as getting £5 back on Deliveroo orders twice per month.

However, the card does have a relatively high annual fee and you will have to spend a minimum of £3,000 in the first three months to unlock the 20,000 Membership Points bonus.

Amazon credit card review Amazon Platinum

New cardholders will instantly benefit from a £20 Amazon gift card when they take out the Amazon Platinum card. After that, you can continue to earn Amazon rewards points, with a higher rate given to Amazon Prime members.

It is a straightforward card with few bells and whistles, but it does benefit from not charging an annual fee. You can read a full review of the card in our Amazon Platinum credit card review.

 

M&S Rewards credit card  M&S Rewards 

There are a number of different M&S Bank credit cards that offer rewards. However, for those really looking to boost the reward-earning potential, this card gives you the opportunity to earn double points for every £1 spent in M&S in the first year. It's a really good option for those who shop regularly at M&S, either for food, clothes or furniture, as this gives you the best chance of maximising your points, which are paid out as vouchers to spend in store or online. However, you will also earn points on all your spending on the card, even purchases not at M&S.  

Advantages of a cashback/reward purchase credit card

Cashback and reward credit cards enable you to earn cashback and rewards as part of your normal monthly spend. If you time it right then you can benefit from an initial 30-60 day interest-free period which can free up cash flow and help with expensive months, such as Christmas. This will only work if you intend to continue using your credit card each month going forward (while paying your balance in full and on time). For example, a credit card statement may run from 16th to the 15th of the month, with payment due by the 29th. Theoretically, you could use your cashback/reward credit card from 16th of the month, meaning you are no longer spending through your current account. The credit card payment would not be due until the end of the following month and, as you are likely to have been paid again by then, you should find that you can easily pay the balance.

Managing your money in this way to take advantage of the interest-free period requires good planning and preparation and so make sure you are aware of the statement and payment dates and always ensure you set up a direct debit to pay the balance in full each month.

Things to consider before getting a cashback or reward credit card

Always consider your financial circumstances before applying for any credit card. Getting caught up in the excitement of cashback deals and rewards can sometimes cloud your judgement and leave you struggling to clear the credit card balance, especially as cashback credit cards tend to charge higher interest than other cards.

It is absolutely vital that you clear the outstanding debt each month to ensure you use the card to its full potential. The advertised cashback rewards and bonuses are often subject to your own personal circumstances and so be prepared to either be rejected or offered alternative terms if your finances are not in good shape.

All applications are subject to credit checks so make sure you know your chances of being accepted before you apply. Most companies will allow you to check your eligibility before you apply, resulting in a 'soft search' that doesn't impact your credit score.

Is a cashback or reward credit card right for you? 

It is often far simpler to use a debit card for purchases as it ensures that you only ever spend the money you have, and, subject to overdraft charges, means you won't be charged. While some banks and online services offer cashback deals through debit cards, these are often restricted to just a few merchants and so a cashback credit card is often the best way to maximise cashback and rewards for everyday spending. Those who struggle to control their spending may be better off using their existing debit card and looking at other ways to earn cashback and rewards, such as cashback sites.

Cashback/reward credit card FAQs

How much can I earn by using a cashback credit card?

Cashback and rewards will depend firstly on who you apply through and then how much you spend. The more you spend with someone like American Express, the more you earn. Someone spending £50,000 a year with an Amex Platinum cashback card could earn as much as £675, however, this is probably unrealistic for most. If we look at an amount of £12,000 per year, which when you consider grocery costs and discretionary spending is far more realistic, then you can expect to earn £200 in the first year.

How do I pay off a cashback credit card?

Each card provider will set out the repayment terms in its terms and conditions document. With a cashback or reward credit card, it is advisable to repay the balance in full each month.

Can I use a cashback credit card for new purchases?

Yes, it is the way the card is designed, however to use a cashback card most effectively you should clear the balance in full each month. Never use a cashback or reward card to build up debt as it can be very expensive. Some reward cards do offer slightly longer interest-free periods, however you are likely to be better off applying for a 0% purchase credit card, rather than a cashback or reward card. Check out our article 'Compare the best 0% purchase credit cards'.

Can I use a cashback credit card for balance transfers?

Some cashback credit cards allow balance transfers, but don't offer as long an interest free period as you would get with a dedicated balance transfer card. The exception to this is the Santander All in One credit card (detailed above), which combines cashback with competitive interest-free periods on both balance transfers and purchases. As always, make sure you read the terms and conditions of whichever card you take out. If you are looking specifically for a balance transfer credit card, check out our article

It is not advisable. Some providers will allow you to make a balance transfer, however the interest period will usually be quite short when compared to a balance transfer credit card, a product that is designed specifically for that purpose. Check out our article "Best 0% balance transfer credit card deals".

What happens when the interest-free period ends?

If you still have a balance remaining at the end of the interest-free period, the interest rate charged will be at the current rate for the card. This may be higher or lower than the rate advertised on the application, always check to make sure you know the rates being charged. Cashback and reward credit cards tend to have short interest free periods and high-interest rates and so make sure that a cashback credit card is right for you before you apply.