Compare the best cashback credit cards

What are cashback credit cards?

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. Higher 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.

Earn rates aren’t as high as they were a few years ago, and there are fewer cashback credit cards around, but there are some tasty intro bonuses up for grabs, from elevated earn rates for a set period to one-off lump sums – provided you meet the 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 dedicated cashback cards let you earn money back on every purchase.

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 are three main ways you can earn cashback on your credit card purchases, which we’ve outlined here:

1. 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.
2. 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.
3. 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.

How to compare cashback credit cards

Here are the key details to look at when you’re comparing different cashback credit card options:

• The cashback amount. Weigh up the value of the cashback you can earn based on your spending habits and the overall cost of the card (i.e. the annual fee and purchase rate). This will help you decide if the rewards are worth it.
• Reward caps. Some cashback cards limit the amount of money you can get from them. For example, you might be able to get 1% cashback per £1 spent but have a limit of £50 per month.
• Introductory offer requirements. If the cashback reward is offered as a special promotion, make sure you understand the terms and conditions before signing up. Depending on the offer, you may want to look for the date the offer expires, spending requirements or participating retailers to take advantage of the cashback reward.
• Ineligible transactions. While most everyday purchases are eligible to earn cashback rewards, transactions such as cash advances, bill payments and credit card fees are usually ineligible. Check these details before you get a card to decide if it suits your spending habits.
• Rewards value. If you have a card that earns points and want to redeem them for a cashback reward, check to see if there are other rewards (such as flights, travel upgrades or merchandise) that have a retail or regular price value that is higher than the cashback amount. This will help you get the most value out of your rewards.
• Annual fee. Weigh the card’s annual fee against the cashback you expect to earn to work out how much value you’ll get from the rewards. Ideally, the amount of cashback you get should be worth more than the annual fee.
• Other card features. Make sure you also consider the card’s standard variable purchase rate, as well as any additional charges, fees and complimentary extras. Along with the rewards and annual fee, these features will help you decide if the card suits all your needs.

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.

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:

Eligibility requirements

• 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

• Proof of identification. You’ll be required to provide a copy of your driver’s licence and/or passport for proof of identification.
• Proof of income. You’ll be asked to provide your employer’s details, as well as a recent tax return and/or payslips. If you’re self-employed, you’ll need to include your accountant’s details.
• Financial information. You will need to provide other information about your finances including debts, liabilities and expenses.

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

• Are casback credit cards taxable?

  No, cashback on credit cards are not subject to tax as it is seen as rebate on money you’ve spent rather than your income.While the cashback rate varies from product to product, most cashback returns are somewhere between 1% and 2% of the total value of the transaction. This figure can jump when you look at merchant and retailer bonus cashback reward schemes, or when a fixed rate of cashback is offered (ie. £20 when you first use the card).

• Can I use cashback to pay the annual fee or my credit card debt?

  Yes, you can generally use cashback rewards to pay your card’s annual fee or the outstanding balance of a credit card.

• Are there any 10% cashback credit cards?

  Currently, there are no credit cards in the UK that offer 10% Cashback on your spending. 5% is the highest available cashback deal, the Amex Platinum Cashback Everyday offers 5% cashback up to £100 during the first three months of card membership.

• When is cashback paid back?

  This depends on your provider. Some providers pay cashback monthly, quarterly or annually. Some cards may require a minimum yearly spend before you qualify for the cashback reward. Always check the terms of the deal before applying.

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