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
Updated April 6th, 2020
Approval for any credit card will depend on your status. The APR shown represents the interest rate offered to most successful applicants. Depending on your personal circumstances the APR you're offered may be higher, or you may not be offered credit at all. Fees and rates are subject to change without notice. It's always wise to check the terms of any deal before you borrow.
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:
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, gambling transactions 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.
This tool is designed to help you establish whether or not a particular cashback card would be worth it for you. Bear in mind that the calculation is based on clearing your balance each month, not using the card for cash advances, etc., so that you don’t incur any interest or fees other than any obligatory annual/monthly account fees. Don’t forget that, depending on the card issuer, some transactions might not be eligible for cashback, and cash advances definitely won’t be.
Expected annual spend
Account fee (per annum)
Expected annual spend
You’d earn £ in cashback over the year. Taking into account fees of £, you’d pocket £.
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
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
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).
Yes, you can generally use cashback rewards to pay your card’s annual fee or the outstanding balance of a credit card.
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