Compare the best cashback and reward credit cards

16 min Read Published: 15 Sep 2020

Best cashback credit cardsWhat is a cashback/reward credit card and how does it work?

A cashback or reward credit card enables you to earn cashback or rewards as you spend. So, every time you spend on the card, you can earn rewards and cashback, subject to the details set out in the terms and conditions. The rewards you receive may be limited to how often you shop, who you shop with or how much you spend. The maximum you can earn is usually capped and is paid as credit on your card balance either monthly or annually.

It is important to note that cashback credit cards should only be considered if you are able to pay off the balance in full each month. Ideally, you would treat a cashback credit card in the same way as you would a debit card, using it to purchase essentials as well as your usual, budgeted discretionary monthly spend. Cashback credit cards tend to have a higher rate of interest payable which is why it is especially important to pay it in full each month and not use it to build up debt. If you are thinking of applying for a card to make new purchases (outside of your usual monthly spend) then check out our article 'Compare the best 0% purchase credit cards'.

What are the best cashback credit cards?

When looking for the best cashback credit card you should consider the following:

  • The total reward (eg. 3% cashback for 3 months is not as good 1% cashback for 12 months)
  • Whether there are any account charges levied (monthly or annual fees)
  • What is the APR?

Having completed a full review of the best cashback credit cards available in September 2020, here are my top 2.

Best cashback credit cards in September 2020

Card Cashback Breakdown Annual cashback limit Fee Representative APR Good For...
American Express Platinum Cashback
  • 5% cashback for the first 3 months (max £125 cashback)
  • 1% cashback up to £10k
  • 1.25% on spending over £10k
No limit £25 27.30% Big spenders
American Express Platinum Everyday
  • 5% cashback for the first 3 months (max £100 cashback)
  • 0.5% cashback on up to £5k
  • 1% on spending over £5k
No limit £0 22.20% Those who do not want to pay a fee

 

American Express Platinum Cashback Credit Card vs American Express Platinum Everyday Credit Card

Below we compare the top two American Express Cashback Credit Cards (Platinum Cashback vs Platinum Everyday credit card) based on spending £1,000 per month over 12 months:

Cashback earned in first 3 months Additional Cashback (after initial offer period) Total Cashback Actual Cashback (less fees)
American Express Platinum Cashback £125 £100 £225 £200
American Express Platinum Everyday £100 £85 £185 £185

As you can see from the comparison above, if you are likely to spend around £1,000 per month then the American Express Platinum Cashback credit card will work out better for you, even taking the annual fee into consideration. If your spending is likely to fluctuate and you cannot guarantee that you will spend around £1,000 per month on a credit card then it may be better to consider the American Express Platinum Everyday credit card.

 

Amex cashback card     American Express Platinum Cashback Credit Card

    • 0% interest on purchases for up to 56 days (pay the balance in full each month to ensure no interest is charged)
    • 3% fee on cash advances (minimum of £3)
    • Annual fee of £25
    • Late payment fee of £12
    • No cap on how much cashback you can earn in a year
    • Minimum repayment of £25 or 2% of the outstanding balance plus interest, plus fees, plus any insurance premium, plus the amount of any arrears which are payable immediately.
    • Representative APR 27.30%

 

Amex cashback card     American Express Platinum Everyday Cashback Credit Card

    • 0% interest up to 56 days (pay the balance in full each month to ensure no interest is charged)
    • 3% fee on cash advances (minimum of £3)
    • No annual fee
    • Must spend at least £3,000 in order to qualify for cashback
    • Minimum repayment of £25 or 2% of the outstanding balance plus interest, plus fees, plus any insurance premium, plus the amount of any arrears which are payable immediately.
    • Representative APR 22.20%

What are the best reward credit cards?

When looking for the best reward credit card you should consider the following:

  • The total reward and the qualifying criteria to achieve the total reward
  • Whether there are any account charges levied (monthly or annual fees)
  • What is the APR?

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

Best reward credit cards in September 2020

Card Reward Breakdown Smallprint Fee Representative APR Good For
American Express Nectar Earn 20,000 bonus Nectar points worth at least £120 if you spend £2k within the first 3 months You have to pay an annual fee £25 (free for the first year) 27.30% Those who shop at Sainsbury's
Amex Preferred Rewards Gold credit card £50 M&S or Amazon voucher or 13,000 Avios points. One point per £1 spent, two points per £1 spent directly with an airline or on foreign currency or three points per £1 spent at American Express Travel No fee in year one but £140 fee from year 2 onwards £140 (free for the first year) 56.60% Those who shop at M&S, Amazon or who like to travel
Amex Rewards Credit card  Earn 5,000 bonus Amex reward points if you spend £2k in 3 months (points worth approx £25 and can be redeemed at various shops, on travel) You cannot have held an Amex card in the past 2 years £0 22.20% Those who like to travel

 

 

Amex Nectar     American Express Nectar reward card

    • 0% interest up to 56 days
    • 3% fee on cash advances
    • Annual fee of £25 (free for the first year)
    • Spend £2k within the first 3 months and earn points worth £120
    • Minimum repayment of £25 or 2% of the outstanding balance plus interest, plus fees, plus any insurance premium, plus the amount of any arrears which are payable immediately.
    • Representative APR 27.30%
    • Pay the balance in full each month to ensure no interest is charged

 

Amex Gold card     Amex Preferred Rewards Gold credit card

    • 0% interest up to 56 days
    • Spend £3k within the first 3 months and earn points worth £50
    • No fee in year 1 but £140 fee from year 2 onwards
    • Minimum repayment of £25 or 2% of the outstanding balance plus interest, plus fees, plus any insurance premium, plus the amount of any arrears which are payable immediately.
    • Representative APR 56.60%
    • Take advantage of two complimentary lounge visits per year at over 700 airport lounges globally
    • Pay the balance in full each month to ensure no interest is charged

 

amex reward card      Amex Rewards credit card 

    • 0% interest up to 56 days
    • 3% fee on cash advances
    • No annual fee
    • Minimum repayment of £25 or 2% of the outstanding balance plus interest, plus fees, plus any insurance premium, plus the amount of any arrears which are payable immediately.
    • Spend £2k in the first 3 months and receive 5,000 membership points
    • Representative APR 22.20%
    • Pay the balance in full each month to ensure no interest is charged

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.

Cashback credit card vs using your current account

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?

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% 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.

 

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