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Cashback Credit Cards 5% cashback for first 3 months

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Cashback credit cards pay you every time you spend on them, possibly £100s a year. The top card pays 5% cashback for the first three months, others give 3% on fuel and transport spending.

There are also some good fee-free, near-cash reward cards which come close to what cashback cards can offer. We analyse the pros and cons of all.

Best buys: Cashback cards

In this guide

Cashback cards: The best way to use them

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. Cash is totally flexible - you can spend it on anything - and it's easy to compare, so it comes up trumps for almost everyone.

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 and 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, as there's a chance it could be seen as a taxable benefit (you'll still be up even if it is).

If you're not sure you can repay in full every month, focus on a card with a lower interest rate instead. See the 0% Spending Credit Cards guide.

You'll save more by keeping your debts cheap instead of going for cashback. Every card application has a credit score impact, so make sure your debts are sorted before applying for cashback cards (see Best Balance Transfers).

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.

Beware of setting up regular payments from your credit cards. These are technically called recurring payments (or continuous payment authorities) and while you're now able to cancel them with your card provider, they have caused trouble for a lot of people in the past (see the Recurring Payments guide for more).

It's no coincidence that some cashback cards have balance transfer offers - they want you to both spend on the card and shift debts to them. You'll pay a fee, but you'll also take up a lot of your credit limit with the balance transfer, so you've got less to spend on.

By far the best thing to do is use separate cards for earning cashback and balance transfers. See the Best Balance Transfers guide.

But 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 dwarfs the cashback you'll earn.

The easy way to pay off IN FULL

The best way to pay off in full each month is via a direct debit. It allows the card provider to take a variable monthly amount to correspond with what you owe it (see the Direct Debit guide).

Sadly, some providers deliberately omit the 'pay off in full' option from direct debit forms, as it means they'll make less money. If so, just write in 'pay off in full' yourself. The firm should honour it, but call after a week or so and check it's worked.

By doing this, you've effectively made your credit card a debit card, but one that pays you every time you spend on it. Always make sure you have enough cash in your account to cover the direct debit.

It may sound obvious, but always stay within your credit limit. Otherwise you'll be hit by £12 charges.

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, you've a choice between a card that pays the highest short-term bonus rate of cashback (then a decent rate after), or one that pays good long-term cashback.

One thing to consider is whether you want an Amex or a Visa/Mastercard (the former is accepted by fewer retailers).

Pre-apply to check eligibility with NO credit file mark

Most cards in this guide have two links - one is directly to the card, the other is to a tool we've designed to help you check if you might be eligible for the card.

We do a 'soft' credit search which YOU can see, but lenders CAN'T, so it has no impact on your future creditworthiness.

We map the details you give us against lenders' criteria, and show your chances both for the specific card that you've followed the link from, and for the other top picks on this page.

5% intro cashback + 1.25% after Amex platinum

Cashback: 3mths 5% (max £100) | 1.25% after.
Paid out: On card anniversary | Max cashback/year: N/A
Annual fee: £25 | Min spend: N/A
Rate: 18.7% representative APR incl £25 fee - spending is charged at 14% (see Official APR Example)
Min income: £20k household salary

The American Express* Platinum Cashback card (you can use our pre-application eligibility checker for this card) pays new cardholders 5% intro cashback for the first three months on up to £2,000 spending.

After this, all spending attracts a good 1.25% cashback. However, it also charges an annoying £25 annual fee.

If you spend over £10,000 in a year, you'll also get 2.5% cashback in your anniversary month. Ensure you repay in full every month to avoid the 18.7% representative APR.

Good if... you're a big spender.

While the flat rate after the intro rate is a bonus, the annual fee wipes away some of the gain. If you spend less than expected, you'd still be hit with the fee, making it less profitable.

Annual spend	£3,000	£5,000	£10,000	£20,000
Year one cashback (after fee, incl bonus)	£41	£84	£193	£318
Years 2+ cashback (after fee)	£13	£38	£110	£245

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. For example, 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 for the 1.25% cashback.

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.

One drawback of the card is that it's issued by Amex, which tends to charge retailers more when you pay. This means it can afford to give you more cashback, but also means it's accepted less, especially by smaller businesses. See our American Express Guide for more information.

Barclaycard Cashback* Up to 6% intro cashback + up to 2% after ( £24 annual fee)

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Cashback: Up to 6% for 3mths (max £120) | Up to 2% after | Guaranteed 0.5% on all spending
Paid out: On card anniversary
Max cashback/year: £75,000 spend limit
Annual fee: £24 | Min spend: N/A | Card issuer: Visa
Rate: 24.6% representative APR incl £24 fee - spending is charged at 19.9% (see Official APR Example)
Min income: £20k household salary

Spend 15 times a month on the Barclaycard Cashback* card and in the first three months, your biggest five spends get 6% cashback, the rest 0.5% (max £120).

After that, each month you get a still-big 2% cashback on the biggest five, and 0.5% the rest. But the card charges an annoying £24 annual fee.

Good if... you've got a few big purchases coming up.

You'll also get 4% cashback on the biggest five purchases you make (out of 15) in the month that marks your anniversary of getting the card.

Repay IN FULL every month to avoid the 19.9% representative APR, which would wipe out any cashback gains.

Here's what you might get back, depending on what and how much you spend...

Annual spend	£3,000 (5x £25 spend)	£5,000 (5x £50 spend)	£10,000 (5x £75 spend)	£20,000 (5x £100 spend)
Year one cashback (after fee, incl bonus)	£29	£76	£175	£226
Years 2+ cashback (after fee)	£14	£46	£110	£166

Time applications. Apply before a period of big spending, eg, Christmas or house renovation, to get the 6% cashback on your most expensive purchases at that point. Meanwhile, use another cashback card.
Stick to the conditions. Make sure you continue to make at least 15 transactions in total to benefit from cashback, and be aware of your credit limit.
Use a joint card. Those in trusting relationships can max the gain. For example Janet applies, making John 2nd cardholder, so both share the intro 6% cashback on five big purchases. Then John applies, doing the same, to bag another three months at 6% for five expensive spends. After that, just use one person's card for up to 2% cashback.

Santander 123 Cashback* 3% for petrol and transport, 1% for supermarkets

Cashback: 3% on petrol/transport (max £9/mth), 2% in dept stores, 1% in supermarkets, NONE elsewhere
Paid out: Monthly
Max cashback/year: £9/mth on petrol/transport
Annual fee: £24/year | Min spend: N/A | Card issuer: Mastercard
Rate: 22.8% representative APR (incl fee). 18.9% rep. APR on spending (see Official APR Example)
Min income: £7,500

The Santander 123* card (you can use our pre-application eligibility checker for this card) pays three cashback rates: 3% on petrol, rail travel and London Oyster top-ups (up to £300/mth spend), 2% in department stores and 1% in supermarkets.

Yet it has an annoying £24 annual fee, so to take full advantage you must drive or use public transport a lot, otherwise different cards beat it.

Good if... the majority of your spending's on
petrol/transport and supermarkets.

If you spend big on petrol or travel, or in supermarkets, this should wipe out the annual fee quite easily, but it still eats up the gain. Ensure you repay in full every month to avoid the 18.9% representative APR on spending.

Here are some retailers which qualify for the various cashback offers. Not all branches are eligible, so check local outlets:

Fuel and transport: 3%. Includes BP, Shell, Esso, Texaco, Tesco, Asda, Morrisons, Sainsbury's, National Rail and Transport for London (excludes newsagent top-ups).
Dept stores: 2%. Includes Debenhams, House of Fraser, John Lewis, BHS.
Supermarkets: 1%. Includes Tesco, Asda, Sainsbury's, Morrisons, Waitrose, M&S.;

We've analysed how much cashback you might get depending on how much you spend in each of the categories...

Annual overall spend	£3,000	£5,000	£10,000	£20,000
Yearly cashback after fee (assumes 10% supermkt, 10% transport, 5% dept store spend)	Costs £9	£1	£26	£76
Yearly cashback after fee (assumes 30% supermkt, 30% transport, 10% dept store spend)	£18	£46	£116	£184
Yearly cashback after fee (assumes 30% supermkt, 50% transport, 10% dept store spend)	£36	£76	£134	£184

The fee on this card is waived for the first year if you also open the Santander* 123 current account. See the Best Bank Accounts guide for full details.
One downside is that any spending outside the categories below gets NO cashback (along with any fuel and transport spending over £300/mth).

Fee-FREE cashback cards

Capital One Classic Extra* for those with poor history: 0.5% cashback + £10

Cashback: 0.5%
Paid out: Every January
Max cashback/year: Unlimited
Annual fee: None | Min spend: N/A | Card issuer: Visa
Rate: 34.9% representative APR (see Official APR Example)
Min income: N/A

The best fee-free cashback card on the market is the Capital One* Classic Extra (you can use our pre-application eligibility checker for this card), which pays 0.5% cashback on all spending.

There's a £10 annual bonus credit for customers who make all bill payments on time, which helps to supplement the cashback rate. There's no minimum income needed and it won't automatically exclude those with CCJs or defaults over a year old.

As this card is aimed at those with credit issues, the interest rate is huge. So it's even more vital that you ALWAYS repay in full every month, otherwise you'll be charged 34.9% representative APR. Credits limit are also low; between £200-£1,500.

Annual overall spend	£3,000	£5,000	£10,000	£20,000
Yearly cashback	£15	£25	£50	£100

The annual £10 bonus is paid in January. The first one will be proportionate to how long you've had the account, so if it's been open six months, you'll get £5. To be eligible you must make your monthly payments on time, though this should be the case anyway.

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Fee-FREE 'cashback' deals

Some reward credit cards come close to cashback cards, especially those where you can spend points in huge stores that stock a wide range of goods. Plus they have the added benefit that they're all fee-free. These are the best, where the returns get close to cashback cards.

M&S;* - 0.5% back in vouchersPlus 15 months 0% on purchases

Cashback: 0.5%
Paid out: Quarterly
Max cashback/year: Unlimited
Annual fee: None | Min spend: N/A | Card issuer: Mastercard
Rate: 16.9% representative APR (see Official APR Example)
Min income: N/A

The M&S;* credit card (you can use our pre-application eligibility checker for this card) gives one point per £1 spent, or 2 points/£1 at M&S.; It also gives 500 points as an introductory offer, which you get as a £5 voucher when you use the card.

Points are converted into Marks & Spencer vouchers four times each year. The points are equivalent to 0.5% back on most purchases (50p per £100 spend) and 1% when you spend in M&S.;

After the 0% period ends, all spending is charged at 16.9% representative APR, so follow the cashback cards Golden Rule, and set up a direct debit to pay the card off in full.

We've analysed how much you might get back from different levels of spending...

Annual overall spend	£3,000	£5,000	£10,000	£20,000
Vouchers earned per year	£45	£75	£150	£300
Assumes 50% of spend done at M&S; and 50% elsewhere

The card also offers 15 months 0% on spending. Make sure you make at least the minimum repayments during this period or you could lose special deals.
M&S;, like many other banks, tries hard to sell you other products and memberships once you are a customer, so be wary. Make sure you really need something and can't get it cheaper elsewhere before parting with any cash.

Tesco* Up to 1% for days out, restaurants, hotels, mags & more

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Apply*

Cashback: up to 1%
Paid out: when redeemed
Max cashback/year: Unlimited
Annual fee: None | Min spend: N/A | Card issuer: Mastercard
Rate: 16.9% representative APR (see Official APR Example)
Min income: £5,000

The Tesco Clubcard Credit Card* gives one Clubcard point for every £4 you spend on it.

One point is worth 1p (so just a 0.25% return) if spent in-store at Tesco, but boosts to up to 4p (so 1%) if redeemed for some of Tesco's special Clubcard Rewards vouchers. These can be used for a huge array of mainly entertainment-based treats.

For more details on boosting Tesco Clubcard points, read the Loyalty Points guide. The 16.9% representative APR means you should ensure you pay the card off in full each month.

We've analysed what you'd get in vouchers for different levels of spending...

Annual overall spend	£3,000	£5,000	£10,000	£20,000
Vouchers earned per year	£7.50	£12.50	£25	£50
Remember, for some Rewards, vouchers can be redeemed for up to four times their face value

Amazon.co.uk Free £5 voucher, then up to 3% back in Amazon vouchers

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click to apply
Apply

Cashback: 3% for first three months; afterwards 2% at Amazon, 1% on other spending
Paid out: when 1,000 points collected
Max cashback/year: Unlimited
Annual fee: None | Min spend: N/A | Card issuer: Mastercard
Rate: 16.9% representative APR (see Official APR Example)
Min income: N/A

The Amazon Credit Card gives you a £5 Amazon gift certificate when you successfully apply. Then it gives three loyalty points for every £1 spent on the card in the first 90 days.

After that, you get one loyalty point for every £1 you spend on it, or two points per £1 spent at Amazon.co.uk. One point is worth 1p in vouchers. Once you've got 1,000 points, you'll be emailed a £10 gift voucher.

The 16.9% representative APR means you should make sure you pay the card off in full each month, or interest will negate the benefit of the vouchers.

We've analysed how much you'd earn both in year one with the three points per £1 intro bonus, and in subsequent years with normal spending.

Annual spend	£3,000	£5,000	£10,000	£20,000
Vouchers earned per year, year one (incl intro bonus)	£56	£94	£188	£376
Vouchers earned per year, year two onwards	£45	£75	£150	£300
Assumes spending evenly spread over 12 months, and 50% spent at Amazon & 50% spent elsewhere

The card offers 13 months 0% on purchases over £300 (per item) at Amazon.co.uk in the first month you have the card - great if you've got big items on your shopping list. Treat it as a buy-now-pay-later deal, so ensure you save to clear the card before interest kicks in.
Amazon also offers 13 months 0% on balance transfers and money transfers. But the fees are high and can be beaten by other cards (see Best Balance Transfers and Money Transfers) if this is what you're looking for.

If you prefer other schemes, like collecting Avios or Nectar points, then see the Credit Card Rewards and Airline Credit Cards guides for more information.

Cashback cards
Video guide

Video courtesy of It Pays To Watch, Channel 5
Originally broadcast in April 2008

Can you get more free cash from credit card companies?

Free cash from credit cards 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 take advantage of the fact that many credit cards lend money for a short time at 0% interest. Spend on that card instead of your debit card, then stash your salary in a high interest account and you'll be quids in. Full Guide: Stoozing
Credit card freebies
Many credit cards offer incentives like gift cards or vouchers for free flights if you 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

Think before adding the 'insurance'

Thinking about payment protection 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).

But in many cases it has been mis-sold - 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.

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 gobbledegook. Yet in a nutshell, it 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. If you ordered something and if the retailer went kaput, you'd still be able to claim your money back from the card company. Read a full guide to Section 75 refunds.

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Cashback Credit Cards

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