Cashback credit cards pay you every time you spend on them, possibly £100s a year, plus you get added legal protection too.
This full guide compares the top cards and includes all the latest best-buys.
In this guide
Best Buys: Cashback Cards
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Cashback cards: The best way to spend
Cashback credit cards are a form of reward scheme, yet rather than giving points, you get cold hard cash, tax-free, every time you spend on the card. As cash is totally flexible - you can spend it on anything - and it's easy to compare, for almost everyone it comes up trumps.
However before you start mentally counting the cash, ALWAYS follow...
Set up a direct debit to repay the card in full each month, so you never pay interest, which would outstrip any gain.
The reason card companies offer cashback or reward schemes is simple; they want to encourage you to spend on the card and pay them interest. The interest cost of all cashback cards dwarves the cashback you'll earn.
Therefore before applying for a cashback card answer these two questions...
- Are you sometimes unable to repay cards in full? If you can't repay in full every month, instead focus on a card with a lower interest rate. See the 0% Spending Credit Cards guide.
- Got existing credit card debts? You'll save more by keeping them cheap than going for cashback. Every card application has a credit score impact, so ensure debts are sorted before applying for cashback cards (see Best Balance Transfers).
The easy way to pay off in full.
The best way to pay off in full each month is via a Direct Debit, which unlike a standing order, allows the card company to take a variable amount each month to correspond with what you owe it (see the Direct Debit guide for more).
Sadly a few card providers deliberately miss the 'pay off in full' option off their Direct Debit forms, as it means they'll make less money; if that happens just write in 'pay off in full' and send it in. The rules mean they should honour it, though call up after a week or so and check it's in place.
Once this is done, your credit card has effectively become a debit card, yet one that pays you every time you spend on it. While they don't like it, credit card companies don't lose money as they charge retailers every time someone uses one of their cards. By using this technique you're effectively claiming much of that retailer's fee for yourself.
Get more free cash from credit card companies.
Credit card companies throw serious cash at marketing in order to get their cards in our pockets. For those who don't need to borrow it's possible to ride this wave of freebies to be quids in. There are two other ways to make money from credit cards.
- Stoozing
This is an advanced technique where you can make serious cash. It takes advantage of the fact that many credit cards will lend you money for a short time at 0% interest. If you take that money and save it in a high interest account you'll be quids in. Full Guide: Stoozing - Credit card freebies:
Many credit cards offer incentives like free flights or gift vouchers for you to sign up to the card. Therefore if you've a good credit score, just take advantage by signing up even if you don't want the card. Full Guide: Credit Card Freebies
Cashback Cards
Video Guide
Video Courtesy of It Pays To Watch, Five TV
Originally broadcast April 2008
Best Buys: The top intro cashback deals
If you've not had a cashback card before, or are about to embark on some big (but planned for and affordable) spending, the top plan is bag a deal that pays the highest short-term bonus rate of cashback, then a decent rate after that. One of the key ways to choose between them is whether you want an Amex or a Visa card (the former is accepted by fewer retailers)
Another option worth considerting is you can currently get 2% cashback for six months with a debit card, see the Best Bank Accounts guide for full details.
Amex Platinum 5% intro cashback + 0% spending for 6 mths
- Cashback: £15 bonus | 3mths 5% (max £100) | 0.5% to £3.5k | 1% to £3.5k-7.5k | 1.25% above £7.5k
- Paid out: On card anniversary
- Max cashback/year N/A
- Annual Fee: N/A
- Min spend £3,000
- Rate: 0% for 6 mths, then 19.9% representative APR (see Official APR Example)
- Card issuer Amex
- Min income: £30k household salary
- Restrictions: £20 dormancy fee if no spend
The American Express* Platinum Cashback card pays new cardholders an unbeatable 5% cashback for the first three months on up to £2,000 spending. After this, rates are tiered, paying up to 1.25% cashback - though if you don't spend enough you get nowt.
Good if... you've big purchases planned in next 3 months, or spend over £10,000 a year. Need £30k+ family salary.
Six months 0% on spending is also given, so you could spread the cost initial purchases over that time and get cashback too - though ALWAYS ensure its fully repaid or face the huge 19.9% representative APR.
People who have had this deal in the past (it's been around for an age) and previously cancelled, will be able to get the 5% cashback again, once some time has elapsed.
One drawback here is that the card is issued by Amex, as it tends to charge retailers more when you pay, so can afford to give you more cashback. For the same reason while most high street stores and big chains take it, some smaller businesses don’t. See the Retailers who accept Amex table and the Who takes Amex? Forum discussion.
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Year one cashback | £49 | £89 | £179 | £304 |
| Years two+ cashback | £15 | £33 | £89 | £214 |
- Time applications. Apply before a period of big spending, eg, Christmas or house move, to get the 5% cashback at that point; meanwhile use another cashback card.
- Use a joint card. Those in trusting relationships can max the gain. Eg, Janet applies making John 2nd cardholder so both get the intro 5% cashback. John applies, doing the same, to bag another three months 5%. After that just use one person's card to get into the 1.25% tier.
Is more cashback possible? Users of cashback sites (which are free to join) may be able to get even more cashback when they sign up. If you're new to cashback sites, read the Top Cashback Sites guide for an explanation and key warnings.
Capital One - Mastercard5% for 3 mths, then up to 1.25% on more accepted card
- Cashback: 3 mths 5% (max £100) | 0.5% to £6k | 1% to £6k-10k | 1.25% above £10k
- Paid out: Every January
- Max cashback/year N/A
- Annual fee: None
- Min spend N/A
- Rate: 19.9% representative APR (see Official APR Example)
- Card issuer: Mastercard
- Min income: £20,000
New customers to the Capital One World Mastercard* also earn a huge 5% for the first 99 days (max £100 cashback in that time); then rates are tiered, paying up to 1.25% cashback - though you'd need to spend more to hit that top figure than with Amex Platinum.
However, you are issued with a Mastercard which will be a relief to those who grumble about Amex's lack of acceptance in shops, plus many savvy cashback users will already have Amex Platinum so this is a great new option.
Good if... you've big purchases planned in next 3 months, or are consistent big spender. Not Amex. Need to own a property.
There's no cap to the cashback you can earn in a year, yet unlike with Amex Platinum the £100 intro maximum applies to the first three months, so if you spent eg, £5,000 in that time you'd only get £100 cashback.
To get one you must have an excellent credit rating, earn £20,000+ and even own your own home - pretty strict criteria. Fail to repay in full and it's 19.9% representative APR.
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Year one cashback | £49 | £81 | £157 | £270 |
| Years two+ cashback | £15 | £25 | £70 | £195 |
- Time applications. Apply before a period of big spending, eg, Christmas or house move, to get the 5% cashback at that point; meanwhile use another cashback card.
- Use a joint card. Those in trusting relationships can max the gain. Eg, Janet applies making John 2nd cardholder so both get the intro 5% cashback. John applies, doing the same, to bag another three months 5%. After that just use one person's card to get into the 1.25% tier.
Is more cashback possible? Users of cashback sites (which are free to join) may be able to get even more cashback when they sign up. If you're new to cashback sites, read the Top Cashback Sites guide for an explanation and key warnings.
Amex RewardsUp to 1.5% in high street vouchers, plus £90 freebie
- Rewards: 3 pts per £1 in supermarkets, 2pts/£1 in dept. stores, 1pt/£1 elsewhere
- Paid out: Points added monthly
- Min spend: N/A
- Restrictions: £20 dormancy fee if no spend
- Rate: 6 months 0%, then 17.9% representative APR (see Official APR Example)
- Card issuer Amex
- Min income: £30k household salary
The American Express Rewards* card isn't quite a cashback offering, but instead pays you in gift vouchers that can be used at a good selection of high street retailers: Marks & Spencer, House of Fraser, Amazon, Boots, HMV, Waterstones, iTunes & more.
Good if... you're happy getting vouchers not cash, and spend more in supermarkets & department stores.
How much you earn depends on where you shop. You accrue 3 points per £1 spent in supermarkets, 2 points per £1 in department stores and 1 point per £1 anywhere else. Each point is worth 0.5p, so this equates to a 1.5%, 1% and 0.5% cashback respectively.
You also get 6,000 points in each month where you spend more than £500 for the first three months (worth up to £90).
The card comes with a six month 0% period for purchases, meaning you don't have to rigidly follow the 'Always pay off in full' rule to start with (but make sure it is clear by the end of the 0% deal or you'll be hit by HUGE 17.9% representative APR).
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Yearly vouchers (assumes 20% supermarket/petrol spend) | £21 | £35 | £70 | £140 |
- Where you can spend the vouchers. The shops in each category include the major UK chains, and some local stores too. There's no full online list, so to check a specific shop, call Amex on 0845 604 2839.
- A couple of things to watch out for here. First, if you don't spend on the card for twelve months, you'll be charged a £20 dormancy fee, so only get it if you'll use it. Also, if you spend over £500 in supermarkets in one month, the extra spending earns just 1 point per £1.
Best Buys: Top long-term cashback deals
The above cards are fantastic in the first year, as the introductory cashback super-boosts the gain. However, for lower spenders the tiered rates make them less attractive in subsequent years, so take a look at these cards which should stay strong for the long term.
MBNA Amex1.5% for supermarket/petrol, 0.75% elsewhere
- Cashback: 1.5% on supermarket/petrol and 0.75% on everything else
- Paid out: Once a year in January
- Max cashback/year N/A
- Annual fee: N/A
- Min spend N/A
- Rate: 18.9% representative APR (see Official APR Example)
- Card issuer Amex
- Min income: N/A
The MBNA Amex* card pays 1.5% on money spent in most supermarkets or petrol stations and 0.75% everywhere else. There's no maximum limit to how much you can spend and no minimum income required to apply, however you'll still need a good credit rating.
Good if... you spend decent amounts in supermarkets and petrol stations. No min income requirement.
Ensure you repay in full every month so you avoid the big 18.9% representative APR. If you spend a lot on petrol and food, but don't want an Amex card, there's also a Visa version (see below).
If you're an AA member and a big petrol spender see the Cheap Petrol guide for a card offering up to 3% cashback.
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Yearly cashback (assumes 60% supermarket/petrol spend) | £36 | £60 | £120 | £240 |
| Yearly cashback (assumes 20% supermarket/petrol spend) | £27 | £45 | £90 | £180 |
Where can you get the higher rate?
You can earn 1.5% at most supermarkets and petrol stations, however there are some exceptions. The shop must be categorised as a supermarket or petrol station with the payment network (where the payments are processed).
- As of March 2011 the following shops are categorised as supermarkets: Tesco grocery stores and online, Sainsbury’s, Asda, Morrisons, Waitrose, Ocado (the online arm of Waitrose), Iceland and Somerfield. Retailers categorised as petrol stations include: BP, Shell, Esso, Texaco, Q8, Jet and supermarket petrol stations.
- Some retailers are not categorised as supermarkets or petrol stations. These include Marks & Spencer (including online), Tesco Direct, Tesco Homeplus, Farmfoods and Spar.
MBNA has no control over how the retailers payments are categorised and there may be some instances where you don't get the 1.5% rate. However, in these cases you'll still receive 0.75%.
MBNA Visa1.25% on supermarket/petrol spends, 0.5% elsewhere
- Cashback: 1.25% on supermarket/petrol and 0.5% on everything else
- Paid out: Once a year in January
- Max cashback/year: N/A
- Annual fee: N/A
- Min spend: N/A
- Rate: 18.9% representative APR (see Official APR Example)
- Card issuer: Visa
- Min income: N/A
If you already have an Amex, then MBNA* also has a Visa card paying 1.25% on money spent in most supermarkets and petrol stations, then 0.5% on everything else. While the rate here for other spending can be beaten, it's still good for those who have high food shopping or petrol spends.
Good if... you spend decent amounts in supermarkets and petrol stations, and want a non-Amex alternative.
There's no limit to the amount of cashback you can earn. Repay in full to avoid the 18.9% representative APR.
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Yearly cashback (assumes 60% supermarket/petrol spend) | £29 | £48 | £95 | £190 |
| Yearly cashback (assumes 20% supermarket/petrol spend) | £20 | £33 | £65 | £130 |
Where can you get the higher rate?
You can earn 1.25% at most supermarkets and petrol stations, however there are some exceptions. The shop must be categorised as a supermarket or petrol station with the payment network (where the payments are processed).
- As of March 2011 the following shops are categorised as supermarkets: Tesco grocery stores and online, Sainsbury’s, Asda, Morrisons, Waitrose, Ocado (the online arm of Waitrose), Iceland and Somerfield. Retailers categorised as petrol stations include: BP, Shell, Esso, Texaco, Q8, Jet and supermarket petrol stations.
- Some retailers are not categorised as supermarkets or petrol stations. These include Marks & Spencer (including online), Tesco Direct, Tesco Homeplus, Farmfoods and Spar.
The card issuer has no control over how the payments are categorised and there may be some instances where you don't get the 1.25% rate. However, in these cases you'll still receive 0.5%.
Other top cashback optionsThe next best paying cards
Halifax customers: Rewards Clarity£5/mth when you spend £300. Halifax a/c holders only
- Cashback: £5 when you spend £300 in a month
- Paid out: Monthly
- Max cashback/year £60
- Annual fee: None
- Min spend: N/A
- Rate: 12.9% representative APR (see Official APR Example)
- Card issuer Mastercard
- Min income: N/A
- Restrictions: Must also have Halifax reward bank account
The Halifax Rewards Clarity card pays £5 in every month that you spend over £300 (only available by phone or in branches). However, to get one you must have a Halifax Reward* current account, which is also one of our top picks (see Best Bank Accounts).
The cashback is either £5 or nothing, which makes this an unusual offering. If you aren't likely to spend £300 a month, then you may be better off looking at one of the other cards.
It's a good foundation card for anyone who qualifies. If you spent exactly £300/month on it, then the cashback's equal to an unbeatable 1.66%. If you spend more, you'll need a second cashback card to maximise the return on ALL spending. Repay in full to avoid the 12.9% representative APR.
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Yearly cashback | £0 | £60 | £60 | £60 |
Co-op members cashback card0.5% cashback, 1% in Co-op stores
- Cashback: 0.5%, or 1% in Co-op stores
- Paid out: Twice a year
- Max cashback/year: N/A
- Annual fee: None
- Min spend: N/A
- Rate: 15.9% representative APR (see Official APR Example)
- Card issuer: Visa
- Min income: £10,000
The Co-op members cashback card pays 1p per £2 spent, but is only available to people who are members of The Co-operative Group and earn more than £10,000/year. It also donates a small amount to charity at no further cost to you and has a 15.9% rep APR.
| Annual spend... | £3,000 | £5,000 | £10,000 | £20,000 |
|---|---|---|---|---|
| Yearly cashback | £15 | £25 | £50 | £100 |
For a few people these cards can be beaten by specific use rewards schemes, such as British Airways miles on its Amex cards or Nectar points on some credit cards, yet for most cash wins due to its flexibility. For more see the Credit Card Rewards and Airline Credit Cards guides.
Think before adding the 'insurance'
Payment protection insurance is commonly sold with credit cards - the idea is it'll make some payments for you, usually for a year, if you are unable to (eg, if you lose your job).
There have been a myriad of cases where it has been missold eg, borrowers didn't realise they were signing up for it, or it was totally unsuitable for them, and some big lenders have been fined.
The protection isn't always bad, though policies sold with cards are often overpriced (you pay a monthly amount depending on the size of your balance). If you want it, compare the lender's cover with standalone providers such as Paymentcare or Best Insurance.
Always be vigilant to check you aren't getting more than you bargained for when you fill in the application, then check your statement each month to check you aren't inadvertently paying for extras if you didn't ask for them.
Use the card for all spending
Once you set up a credit card, every time you use it you get paid. While this isn't an excuse to 'spend more' it does mean from now on...
Use the cashback for ALL normal spending, replacing cash, cheques, and other debit, credit & charge cards.
For those who have work expenses they need to reclaim, this can be a powerful way to earn more, at no cost to you, provided you can cope with paying the bill in full each month. 
Do check it's fine with your employer though and there's a chance it could be seen as a taxable benefit (you'll still be up even if it is though).
Yet do beware of setting up regular payments from it, or any other credit card. These are technically called recurring payments and unfortunately, unlike standing orders or Direct Debits, once set up you can't cancel them, only the company you're paying can. If you're in dispute, this can be a nightmare (see the Recurring Payments guide for more).
There's extra protection on all spending too...
There's another big bonus to using a cashback card, you actually have far more consumer protection. This all comes about due to what's called Section 75 of the Consumer Credit Act 1974 which says...
75. (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.
Which of course, reads like gobbleydegook... yet in a nutshell means
Buy something costing over £100, here or abroad, and pay on a credit card, and the card issuer's equally liable if something goes wrong.
Now this protection only applies to credit cards, not debit cards or any other plastic and it's hugely important, especially in the current credit crunch climate. It means order something and if the retailer went kaput, you'd still be able to claim your money back from the card company. Read a full article on Section 75 refunds.
Don't withdraw cash or balance transfer
It's important to understand, you only earn the cashback when you spend on it, other transactions don't apply. Worse still there can actually be nasty consquences for doing anything other than spending on a cashback card.
Never use cashback cards for withdrawing cash.
Withdraw cash and you'll often be charged a fee, plus even if you pay the card off in full you'll usually be charged heavy interest. The rule's simple: never, ever, ever use these cards for cash withdrawals.-
Avoid balance transfer on a cashback card
It's no coincidence that many cashback cards have top balance transfer offers – they want you to both spend on the card and shift debts to them. The rules changed at the start of 2011 and now monthly repayments are allocated towards the most expensive debts first.
This is good news, but as the balance transfer's at a higher rate you'll still get charged interest until all the debt's repaid. By far the best thing to do is use separate cards for earning cashback and balance transfers, see the Balance Transfers article.
It's important to understand, you only earn the cashback when you spend on it, other transactions don't apply. Worse still there can actually be nasty consquences for doing anything other than spending on a cashback card.
Work out what you'll earn
Spending on a cashback card and paying it off in full far outstrips using a debit card, you can make £100s/year by using the right one.
Plug in how much you're likely to spend, and whether or not you're new to the top pick Amex Platinum card into this special calculator, and it'll work out how much cashback you'd make, for free, over a year. The tool assumes an equal spend each month of the year, so it may be more or less depending on how much you spend in the first three months.
Do remember though, this is just for the top player, Amex Platinum. You can try using the full RewardsChecker to compare to other cards.
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