Cashback credit cards

Find the right cashback credit card for you^[1]

If getting paid back a proportion of what you spend on your plastic sounds like an appealing prospect, read on to see if a cashback credit card might work for you.

What are cashback credit cards?

They work in the same way as other credit cards, but you earn back a percentage of what you spend on them, subject to the terms of each card.

Your cashback is usually paid annually as a credit on your bill.

However, it's important that you pay your monthly balance in full. Otherwise the interest payments could be outweighed by cashback. Some cashback credit cards can come with high interest rates.

How much cashback will I get?

Cashback rates are typically between 1% and 5% of what you spend, though this top rate will usually only apply for an introductory period.

So, if your card offers 1% cashback and you spend £200 in a store, you'll get £2 back.

Some cards play a flat percentage rate, but others stagger their rates, depending on how much you spend on the card. For example, a card could pay you 0.25% cashback on the first £4,000 you spend per year, which could then rise to 0.5% for everything over that amount.

Also, some cards offer a flat rate for regular spending and a higher rate on purchases made at certain retailers.

If you use your card for everyday spending and/or big purchases, your cashback could be sizeable.

Do be aware, though, that some cards come with a maximum annual cashback limit.

How does a cashback credit card work?

Every time you use your card to spend on eligible purchases, you’ll earn a percentage of every pound back.

But these types of cards are all slightly different, so you need to read the small print carefully and look out for caveats.

Although there are fee-free options, many come with an annual fee. So you’ll need to factor that in and feel confident you'd earn enough from the cashback to make it worthwhile.

For example, if a card has a £3 annual fee and pays cashback at 0.5% you would need to spend more than £600 annually to get any money back.

Some cards may also have a minimum yearly spend requirement to get any cashback at all.

Is a cashback credit card worth it?

If you use your credit card much like you would a debit card - for everyday spending as well as big purchases - plus if you pay off your balance in full every month - then a cashback credit card could pay you back a good amount of money.
As long as you’re not tempted to spend more than you need to, a cashback card means you get rewarded for money you would have spent anyway. You could look upon it as getting discounts off purchases every time you shop.
Like all credit cards, purchases on cashback credit cards for items over £100 and under £30,000 come with Section 75 protection, meaning you can claim a refund from your card issuer if things go wrong.
Look for a card that best suits your shopping habits - for example, a card that pays a higher cashback percentage at a retailer you use a lot.
If you use the card responsibly and make all your payments on time, you can build up your credit score.

What’s an alternative to a cashback credit card?

If you tend to leave an unpaid balance each month, then a cashback card isn't the best way to manage your money.

As soon as you leave a balance on the card, you risk wiping out your cashback, and quite probably spending more in interest than you earn.

Instead, it might be worth considering a purchase credit card offering a 0% period on new spending.

Frequently asked questions

What APR do cashback cards usually have?

Cashback cards normally have a higher representative APR than standard cards, often more than 20%, so they can be an expensive way to borrow. That’s why you need to be confident that you can clear your balance in full each month, or the interest you pay will soon outstrip the money you earn.
Do cashback cards allow you to withdraw money?

Yes, but it’s best to do this only in an emergency because hefty fees will usually apply. You’ll also pay interest on the money from the day you withdraw it until you pay off the balance.
What’s the difference between a cashback card and a rewards card?

Rewards cards work in a similar way to cashback cards, except they earn you points for specific rewards such as AirMiles or supermarket vouchers.

The rewards aren’t as flexible as cashback, because you’re tied to certain retailers, but they’re often more generous.
Can I use a cashback credit card to clear debt?

Cashback credit cards typically come with a high interest rate, so they’re not a good option when you’re looking to clear debt.

Instead, you could look at moving existing debt onto a 0% balance transfer credit card with a long interest-free period.
Can you get a cashback credit card with bad credit?

Cashback cards aren’t easy to be accepted for. Only customers with very good credit histories are likely to qualify.

Failed applications impact negatively on your credit history. However, you can use our smart search tool to show you the cards you're more likely to be accepted for before proceeding with an official application.

This kind of soft search won't impact your credit file.

Guides to credit cards

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