Cashback credit cards earn you cash in proportion to the amount you spend on them. This is known as your “earn rate”. A card that rewards you with £1 for every £100 you spend would have an earn-rate of 1%, for example. The highest earn-rates might be offset by an annual fee – but depending on how much you plan to use the card, a fee could be worth paying.
You’ll also find some tasty intro bonuses up for grabs in this space, from elevated earn-rates for a set period to one-off lump sums – provided you meet minimum spend requirements.
Some cards just offer the occasional opportunity to earn cashback when you spend with a specific brand that they’ve decided to partner with, but we’ve opted to focus on cards where cashback is the main selling-point of the card. Use this guide to find the best deal for your circumstances, calculate your potential earnings and discover how you can get the most value out of this rewarding type of card.
Comparison of cashback credit cards
How do cashback cards work?
A cashback credit card gives you cash rewards on pretty much all your spending – usually in the form of credit on your account. The offers vary between cards, with each card offering the potential to earn at different rates (sometimes multiple rates depending on where you spend) and some offering an introductory “sign-up” bonus as a sweetener.
In fact, there three main ways you can earn cashback on your credit card purchases, which we’ve outlined here:
- Instant cashback when you make an eligible credit card purchase. For example, if you make a credit card purchase of £1,000 and there is a 2% cashback promotion, the credit card provider will give you £20 back.
- Cashback promotional offers on sign up. Some cards have a cashback promotion for new customers. These offers usually require you to apply before a set date and spend a specific amount within the first few months you have the card.
- Cashback via a credit card rewards program. As well as using points for flights or merchandise, some credit card rewards programmes give you the option to redeem your points for cashback on your account.
Is there a catch?Just like other reward credit cards, you need to meet the spending requirements or eligibility requirements to earn cashback. For example, cashback may only be earned on “eligible purchases”, with common exclusions including cash advances, balance transfers and refunded purchases. Some cashback credit cards may also cap or limit the amount of money you can earn per month or year. Make sure you read the card’s Product Disclosure Statement for more information.
How to compare cashback credit cards
Here are the key details to look at when you’re comparing different cashback credit card options:
What is APR?Credit card promotions have to include an Annual Percentage Rate (APR), which all card issuers must calculate in the same way.
Credit card fee structures can get fiddly, so the APR’s designed to benchmark the yearly cost to borrow, with a view to helping consumers compare cards against each other. It takes into consideration the default interest rate plus any mandatory, regular account fees.
There’s a big catch though: the Financial Conduct Authority (FCA) states that this rate must be what 51% (or more) of people accepted for a card receive. That means that up to 49% of those accepted for a credit card may end up paying a higher rate. This is why it’s often called “Typical” or “Representative” APR.
Moreover, when it comes to cashback credit cards, APRs are missing a big part of the puzzle, because while they reflect cost of borrowing and annual fees, they don’t take into account the money you get back when you use the card. A cashback credit card may come for an annual fee and therefore feature a higher representative APR, but can still be worth it if you spend enough to make up for it.
Advantages and drawbacks of cashback offers
Weighing up some of the pros and cons could help you determine whether a cashback credit card is right for you.
- Money in your pocket. This type of reward offer gives you the chance to get money back for paying with plastic.
- Pound value. Instead of earning points per £1 spent, cashback credit cards offer a straightforward reward. If you know roughly how much you’re going to spend, you can easily calculate the potential benefit of cashback.
- Other extra features. Credit cards with cashback promotions may offer other features such as complimentary travel insurance, rewards programmes and concierge services.
- Annual fees. To get the best earn rates, you’ll generally have to pay an annual fee. The value you get back from the rewards should be higher than the annual fee – if it isn’t, the card’s not worth your while.
- Rates of interest. If the cashback offer is a feature of a more premium product, you may find that it comes with higher interest rates. Make sure you can repay the amount you’ve charged for the cashback (as well as other purchases) before the end of the statement period.
- Limited rewards. Some cashback credit cards may have a cap on the number of times you can redeem a cashback offer. For example, some many only allow you to receive the cashback once, while others may allow you to take advantage of it up to a capped amount of times in a set period.
How to apply for a cashback credit card
If you’ve decided you want a cashback credit card, you can apply online in around 10-15 minutes via a secure web service. But before you apply, make sure you meet the eligibility requirements and have the necessary documents needed to complete your application. These will vary from card to card, but you can usually expect the following:
- Age. Cardholders must be at least 18 years of age.
- Residential status. Most credit cards require cardholders to be permanent UK residents.
- Minimum income. The minimum income requirement will vary between cards. Some providers don’t require you to have any guaranteed yearly income at all. Some providers will specify simply that you must have a regular income, and some will require a minimum household income.
- Credit history. Most UK credit card issuers require applicants to have a good credit history, although there are cards available for those with poorer credit ratings.
Necessary documents and information
Once you’ve provided all of this information and hit “submit”, you should receive a response regarding your application within 60 seconds. If you’re approved, you’ll receive your card in the mail within 1-2 weeks. If the card has a cashback offer, you should read the Product Disclosure Statement to confirm the terms and conditions and when you can expect to receive the cashback credit in your account.
If you’re looking for a new credit card, a product with a cashback offer could provide you extra incentive to pay on plastic. While cashback offers can be rewarded, they always come with terms and conditions, so make sure you understand what these are and compare your options before you apply for the card.
Frequently asked questions
Compare credit card by type or benefit
Read more on this topic
Vitality American Express Credit Card review September 2020
If your credit card is as active as your lifestyle, the Vitality Amex credit card offers a generous cashback scheme.
Topman Mastercard review September 2020
With double reward points and instant spend, the Topman credit card could be the financial accessory of choice for Topman regulars.
Topshop Mastercard review September 2020
The Topshop Mastercard is geared towards loyal Topshop customers with bonus reward points, same-day shopping credit and a dedicated app.
American Express discount codes
Find points bonuses, airport lounge access deals, reduced annual fees and more with our Amex promo codes.
London Gatwick No1 Lounge review (North terminal)
Find out how Gatwick’s premium No1 Lounge fared during peak hours, whether it’s worth the entry fee and how to enjoy complimentary access.
Emirates credit cards
Enjoy premium travel benefits like flight upgrades, travel insurance or lounge access with a credit card that earns points transferable for Skywards Miles.
Points Finder: The best rewards credit cards for July 2019
Points, cashback or air miles? No matter which kind of rewards credit card you’re looking for this month, we’ve got you covered.
Miss Selfridge Mastercard review 2020
Frequent Miss Selfridge shoppers can collect points as they spend, to redeem with Arcadia brands in-store or online.
Guide to IHG Rewards Club program
Get hotel benefits with IHG Rewards Club points. Find out how to earn points on your day-to-day spending.
Compare metal credit cards for September 2020
Plastic? That’s so 2018. Metal cards have finally reached UK shores, but the selection remains limited.