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Compare the best rewards credit cards of March 2021
Enjoy 1000s of bonus points on sign-up and collect points as you spend with the best rewards credit cards.
Compare rewards credit cards
In this table we’ve gathered up the “earn-rates” of different cards. It’s crucial to note that how much a point is worth will depend on the card issuer, programme and potentially even how you’re redeeming the points.
What are rewards credit cards?
Rewards credit cards offer you points for your everyday spending, which can then be redeemed for a variety of travel and lifestyle freebies. You could enjoy free flights and upgrades with a frequent flyer credit card, get rewarded when you shop at your favourite supermarket or get cashback on your account.
As well as offering these benefits, rewards credit cards typically come with a higher interest rate and an annual fee. So it’s smart to compare your options to make sure the benefits outweigh the costs.
How do credit card rewards programmes work?
Rewards credit cards usually earn you points for every £1 spent on eligible transactions. When you’ve have earned enough points, you can redeem them for rewards such as travel, flight upgrades, gift cards, cashback and merchandise.
Most rewards credit cards also have higher standard interest rates than other options, and sometimes also an annual fee, because it costs lenders money to offer a rewards programme. Compare the potential costs of a rewards card against the potential gains, so that you can decide if the card you’re considering is going to actually benefit you.
What rewards do credit cards offer?
The rewards you can get with a credit card depend on the card you choose and the rewards programme. Some of the most popular reward categories include:
- Flight upgrades
- Gift cards
- Fuel vouchers
- Instant shopping discounts
- Fashion items
- Tickets to concerts and other events
How can I use my credit card rewards?
The steps required to use your points to redeem rewards varies depending on the credit card and the rewards programme. But there are a few key factors to remember:
- Account login. You must log in to your credit card account or rewards programme account to make redemptions. Once you’re logged in, it’s usually a simple process of going to the “Rewards” section, then selecting “Use points” and following the prompts.
- Required points. Every reward option available for redemption has a specific point value (e.g. 10,000 points for a £50 gift card). This means you need to have at least this amount of points in your account to redeem your chosen reward.
- Points-plus-pay. Some programmes allow you to use a combination of points and money to redeem your chosen rewards. This gives you more flexibility if you haven’t earned enough points when you want to make redemptions.
Types of credit card rewards programmes
There are a variety of different rewards credit cards you can compare and choose based on the benefits you want. These can be separated into four types of reward programmes, which we’ve outlined below.
Frequent flyer programmes
Frequent flyer (or “air miles”) programmes are traditionally designed to earn you points and other benefits when you travel with a particular airline, such as British Airways or Virgin Atlantic. There are two main ways you can earn frequent flyer points with a rewards credit card:
- Direct earn frequent flyer credit cards. These cards are linked with a specific frequent flyer programme and rewards are added directly to your airline loyalty account. Frequent flyer programmes that are linked to direct earn credit cards include Virgin’s Flying Club, Lufthansa’s Miles & More and >Emirates Skywards.
- Indirect earn frequent flyer credit cards. These rewards credit cards let you transfer the points you earn to frequent flyer programmes used by multiple airlines. For example, Lloyds Bank offers a credit card that lets you collect Avios, which can be redeemed with a number of airlines.
Read our guide to frequent flyer credit cards.
Credit card rewards programmes
Many credit card companies have their own branded rewards programmes for customers. These options allow you to redeem points for a variety of rewards, including frequent flyer points travel, merchandise, gift cards and credit on your account.
Supermarket and retail reward programmes
Some rewards credit cards earn points and offer other benefits at supermarkets and major retailers.
Cashback credit cards
These types of rewards cards add credit or “cash” to your account when you meet certain spending requirements. Most cashback credit cards offer a percentage of your total spend as cashback, or provide a one-time cashback sum as an introductory offer when you apply and are approved for a specific credit card. Make sure you know what the cashback terms and conditions of your card are, because they can vary considerably.
Cashback with other reward credit cards
You can also get cashback through most of the frequent flyer, credit card and supermarket or retail rewards programmes outlined above. Just choose the “cash” or “gift cards” category of your rewards programme to see what options are available.
In addition to your specific card’s rewards programme, credit card networks offer their own range of benefits such as Mastercard Priceless Cities and American Express Experiences (formerly American Express Invites).
How to compare reward credit cards
Comparing credit cards helps you find the features that suit your lifestyle while also keeping costs affordable. Below, you’ll find a checklist of things to consider when you are comparing reward credit cards.
- Points per pound. The more points you earn per pound spent, the greater the potential value. A good rule of thumb is to look for a card that offers at least one point per £1 for most transactions.
- Point expiry and caps. Some credit card reward points expire after a certain amount of time, and some accounts have a limit on how many points you can earn in a month or year.
- Bonus point offers. Reward credit cards often have sign-up deals that give you hundreds or thousands of bonus points. Usually these offers require you to spend a certain amount of money on the card in the first few months you have it. As these offers only last for a limited time, they should only be considered after you have a clear idea of the type of card you want so that you can get the most value out of the deal and the rewards card you choose.
- Points values. To work out the value of your rewards, consider how many points it would take to redeem. For example, if you need 10,000 points to get a £50 gift card and your credit card has an earn rate of one point per £1 spent, you would have to spend £10,000 to make a redemption. Breaking down the rewards like this can help you determine whether it’s worth your time and money.
- Rewards partners. Rewards programmes often partner with retailers and businesses to provide you with a wider range of redemption options. You may also have the opportunity to earn bonus points when you shop with partner stores. Choose a credit card rewards programme that has partnerships with your favourite brands and products so you can take advantage of these options.
- Redemption limitations. Some reward programmes have blackout periods when you may not be able to make redemptions. Check the fine print for this information and consider the impact it could have on you.
Rates and fees
- Annual fees. Some rewards credit cards charge an annual fee. The value of the rewards you are likely to earn should be equal to or more than the annual fee of a credit card.
- Foreign transaction fees. Most credit cards apply a charge for transactions made overseas or with an international retailer online, usually worth 2% to 3.5% of the total transaction. Make sure you consider this fee before choosing a card – especially for any rewards card that offers more points for foreign transactions.
- Purchase rates. Rewards credit cards often have high standard interest rates. If you think you’ll carry a balance, consider how much interest your purchases will accrue and whether the rewards will outweigh the cost of your repayments.
- Balance transfer rates. Some balance transfer credit cards also come with rewards. These cards allow you to move an existing debt to the new card and pay a low introductory interest rate on the balance. Usually, you won’t earn points for the balance that you transfer, and any new purchases will be charged interest at the purchase rate from the time the transaction is made. If you have credit card debt, it may be better to focus on paying it off completely before considering a rewards card.
- Cash advance rate. If you use a rewards credit card for a cash advance transaction, such as getting money from a cashpoint, you will be charged interest at the cash advance rate, which is usually very high. Cash advances usually don’t earn reward points either.
Rewards credit cards may come with a range of other fees, such as late payment and overlimit charges. Make sure you check these costs and factor them into your comparison so that you can choose a card that is affordable for you.
Rewards credit cards often come with a variety of additional features that can add value to the account you choose. Popular perks include:
- International travel insurance
- Airport lounge access
- Complimentary flights
- Hotel stays
- Purchase protection insurance
- Extended warranty coverage
- Price match guarantees
- Concierge services
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.
Rewards credit card often have higher APRs that other type of credit cards. That’s because many of them come for an annual fee. However, the APR doesn’t take into account the value of the points or the cashback you’ll get in return. So, while it can be a useful indicator of how expensive borrowing with your credit card will be, looking at the APR isn’t really the best way of comparing rewards credit cards. You’ll have to do the maths by yourself to figure out whether the rewards are worth the fee or not.
Will a rewards credit card work for me?
The value of a rewards credit card depends as much on the cardholder as the actual card you choose. So rather than making a definitive statement about whether or not reward credit cards are valuable, let’s take a look at the key factors that make them likely or unlikely to work for you.
A rewards credit card could be worth it if you:
- Pay off your credit card balance in full every month
- Currently use or plan to use a credit card on a regular basis
- Have a clear idea of the type of points you want to earn
- Are part of, or want to join, an existing reward programme that could be complemented by a credit card (i.e. a frequent flyer programme or shopping reward program)
- Earn enough to pay a higher annual fee
- Can regularly make use of the rewards or complimentary extras on the card, such as insurance
A reward credit card might not be right if you:
- Have a lot of credit card debt
- Often carry a balance on your credit card
- Rarely use a credit card
- Won’t be able to regularly use complimentary extras on the card
- Can’t afford a higher annual fee
- Are tempted to overspend in order to earn rewards
It’s worth noting that there are some exceptions to the guidelines above. If you can’t afford a high annual fee, for example, you might still get a lot of value out of a reward credit card with no annual fee. On the other hand, if you regularly use a credit card but also have a lot of debt, it might be better to switch to a balance transfer or low interest rate credit card so that you get value out of paying less interest.
While rewards credit cards can be a useful way to get something back for your purchases, it’s important to remember that you have to repay everything (plus interest, unless your card offers an interest-free period in which you can clear your balance). There are also annual fees and other costs to consider. But by factoring in both benefits and costs when you compare reward credit cards, you can find an option that suits your needs.
Frequently asked questions
Want to know more about rewards credit cards? Below, you’ll find answers to the most common questions we get about them. You can also leave your own question by filling out the form below.
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