Current accounts with cashback
Learn how current accounts with cashback work, whether they're right for you and how to find the best current account.
Fancy earning a bit of extra cash every time you spend money? A current account with cashback is the answer. Here’s more about the pros and cons of these accounts and how to compare them to choose the one that’s best for you.
What is a current account with cashback?
Some banks offer current accounts, which will credit a cash reward back into your account when you make debit card purchases. These rewards tend to be based on a percentage of your spending.
A lot of these accounts will only pay cashback with certain retailers or on a certain category of spending (groceries, travel, etc). Most will cap the maximum amount of cashback you can earn per month.
In some cases, you have to “activate” a cashback deal using your bank’s online banking rewards portal before making a purchase. However, some banks’ rewards systems are sophisticated enough to automatically credit cashback whenever you make an eligible purchase.
A lot of current accounts offer cashback instead of paying interest on in-credit balances, although some do both.
How to open a current account with cashback
Opening a current account with cashback is no different to opening any other type of current account. As with most bank accounts, you can apply to open a current account online, by phone or in-branch.
The majority of banks are signed up to the Current Account Switch Guarantee, which guarantees a seamless switch from your existing current account to your new account within seven working days.
How to compare current accounts with cashback
The best way to compare these current accounts is to try and calculate exactly how much you’re likely to earn. This isn’t always easy, because what you’ll earn will be credited as a percentage of your overall spending.
Let’s say one account offers 0.5% cashback on all spending up to £100 per month, while another pays 2% cashback on all grocery shopping up to £250 per month. In this case, the amount of cashback you’ll earn is based on what spending you’re going to do in the future.
Cashback is unlikely to be the only factor you’ll want to consider either. Make sure you also look at features such as interest paid on in-credit balances, overdraft options, customer service and branch access as well.
Perhaps, after all this, you’ll decide that the other factors are more important than the potential cashback that you could earn anyway. For this reason, make sure you compare all features of a current account to figure out which is best for your needs.
Pros and cons
- Earn cashback on your purchases
- Unlike interest, cashback is tax-free
- Some banks allow you to earn cashback automatically
- Some accounts offer cashback instead of interest on in-credit deals
- Some accounts require you to “activate” cashback deals before you can earn money
A current account that offers cashback is obviously nice.
However, to find the best account for you, it’s recommended that you compare all the features of these accounts, as well as the amount of cashback that you’re likely to earn.
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