The top credit card reward schemes pay you £3 for every £100 spent on them, an easy way to make £100s or £1,000s a year just by changing plastic. Yet some use impenetrable points systems to disguise poor payouts.
This guide intensively analyses every major scheme to calculate the best buys for frequent flyers, cash, and more. It includes our RewardsChecker tool, which compares all the schemes.
In this guide
How rewards cards work
The premise is simple. Spend on one of these cards and they pay you - some of these cards even pay you cashback. Do it right and you can earn £100s or even £1,000s a year worth of goodies, at no cost. Everyone should consider it.
It sounds great - everyone loves something for nothing. But unless you're careful, cards will actually deliver nothing for something, as there are a couple of major holes to watch for.
The reason cards give rewards is to encourage spending, as do that and they can charge us 18% APR or more and retailers up to 1%. So always follow…
Getting charged interest almost always dwarfs even the very best rewards schemes, so quite simply…
If you want rewards, always set up a direct debit to repay the card in full each month, so there's NO interest.
Sadly, some card providers deliberately miss the 'repay in full' option off their direct debit forms. If so, just write 'pay off in full' and send it in. It should be honoured, but call to check.
It's also worth watching for any annual fee. These are now rare, and everyone except very high spenders should avoid any card with one. The cost isn't usually recovered by the extra rewards.
Can't repay in full every month?
If you're not sure you can always repay the card in full, then DON'T pick a card for rewards. Instead focus on a card with a lower interest rate; see the 0% Credit Cards guide.
As applying for any financial product has a minor credit score impact (see the Credit Rating guide), if you have existing credit card debts it's also worth prioritising making them cheap before going for rewards by doing a balance transfer.
Don't believe the hype
Some schemes are focused on making people think they're earning large, when actually payouts are pretty paltry. To what extent depends on the type of scheme.
Here you earn days out, flights, holidays, CDs or more by getting points - and that's where the problems start.
For a TV programme stunt I was once asked to design a credit card that looked good, but contained hidden, abysmally anti-consumer traps. Many signed up to my fake MACS card (SCAM backwards), which promised TWELVE points per pound spent.
Most people didn't ask what the points were worth. In fact, they were worth 0.0001p. In other words, nothing. And 12 nothings… is nothing.
It's this lack of transparency that allows reward schemes to create a magical 'something for nothing' mystique. A Sainsbury's Nectar point is worth 0.5p compared to a Tesco Clubcard point worth up to 4p, so one Clubcard point is worth almost eight times more than the Nectar points.
That's what this guide focuses on; a mathematical evaluation of every scheme to pick the real winners.
Cashback or cash-lite cards
Here you earn cash each time you spend, and it's then usually paid once a year as a lump sum (see the Top Cashback Cards guide). The main advantages are you know exactly what you're getting and can spend the rewards anywhere.
Cash-lite schemes are where money earned can be converted into gift vouchers or can only be spent in a specific store, eg, M&S.
Grab credit card freebies
Many credit cards offer incentives such as free flights or electronic goods for you to sign up to the card. Therefore if you've a good credit score, just take advantage by signing up even if you don't want the card. A full list of what's available is in the Credit Card Freebies guide.
Best buy credit card reward schemes
These results are based on evaluating over 40 schemes, calculating the actual value of the rewards for spending. This is done by first number-crunching what an individual point's really worth, then how many points you get when you spend.
Read more about the valuation process
Evaluating credit card rewards
The strength of a rewards card is derived from three main factors; the value of a point in the scheme, how many points a card gives you when you spend, and how useful the rewards are for you.
We researched, number-crunched then evaluated all major rewards schemes and cards to uncover the real return you get. We've split the top payers into categories, enabling you to pick the best-suited card.
This consistent methodology has been used to compile this guide for over five years.
Calculating how much a point is worth
Seven rewards were randomly selected and valued per scheme. The valuation assigned is its 'real' rather than recommended retail price. For example, while a points provider will often list a CD as being worth £13, if it's commonly available for £7, we only value it at £7.
These were then used to evaluate the points' worth. For example, if 6,000 MSE points get you a £24 MP3 player, then one point is worth around 0.4p. The average value of a point over the seven goods is then calculated.
For flight points, where possible the same journeys were used for different schemes to give a consistent valuation. Though this does mean the valuation scheme doesn't include additional perceived value for travelling on some airlines.
Calculating how good a scheme is
Once we know what a point is worth, it is a question of establishing how many points you get when you spend.
For example the Torvill scheme may have points worth a penny, for which you gain one per £1 of spending.
Meanwhile the Dean scheme has points worth 16p, but you only get one per £20 of spending.
So spend £100 on each card and the Torvill scheme gives you £1 worth of points and the Dean scheme 80p.
When estimating annual rewards, any annual fee the card may charge is subtracted.
Only includes currently available card incarnations
This research was published in June 2009, and included all major rewards cards open to new customers at that point. Yet it's possible you may have an older, now unavailable card which pays better rewards, so always check.
If you spot a card that you think merits inclusion, please email email@example.com.
Only general spending counts
Only rewards received on general spending are included, so if a card pays higher rewards in specific shops, that spending is excluded, as that's effectively a shopping loyalty bonus, not a credit card reward scheme.
The rewards are measured in percentages. So a 1.5% reward means you get an average £1.50 worth of points for each £100 spent.
Unless stated, all cards were judged on annual spend of £10,000; very achievable if you lump all your normal spending on it. Plus it incorporates annual fees and unless noted, introductory bonus points. We've separated the top deals into categories.
Best cash returns
This is the top cashback card currently available. This card has a big intro bonus. For full options see the Top Cashback Cards guide.
Amex Platinum* 5% intro cashback + 1.25% after (but £25 annual fee)
- Representative variable rate: 18.7% APR spending is 14% (see Official APR Example)
- Cashback: 3mths 5% (max £125), then 1.25% after.
- Annual fee: £25
- Min income: £20,000 household income
- Max cashback/year: NONE
- Cashback expiry: N/A
The American Express* Platinum Cashback card pays new cardholders 5% intro cashback for the first three months on up to £2,500 spending. After this, all spending attracts a good 1.25% cashback. Also, apply before 16 Mar 2014 and you get a bonus £25 cashback. However, it also charges an annoying £25 annual fee.
If you spend over £10,000 in a year, you'll also get unlimited 2.5% cashback in your anniversary month. Ensure you repay in full every month to avoid the 18.7% representative APR.
While the flat rate after the intro bonus is a big plus, the annual fee wipes away some of the gain - and if you happened to spend less than expected, you'd still be hit with the fee, making this card less profitable.
There's a variety of different schemes, but part of the choice depends on which airlines you prefer and their availability, as often the big gain comes from using credit card points along with points from frequent flying.
Watch out for taxes and charges, as all reward schemes make you pay these on top. In some cases, you may find it cheaper to use the Cheap Flights guide instead. Or for dedicated flyers, see the Airline Credit Cards guide.
British Airways Amex Earn miles for BA flights plus companion flight at £20k+ spend
- Representative variable rate: 15.9% APR Official APR example
- Annual fee: None
- Reward scheme: BA Miles
- Value of 1 point: 0.68p
- Points per £100: 100
- Taxes included? No
- Points' expiry: 36 months, if you don't earn or redeem miles in that time
For some this card is a gateway to cheap flights or upgrades on one of the biggest airlines. Others don't see what all the fuss is about.
The British Airways Amex* card pays one Avios point for each £1 you spend. Each mile's worth 0.68p, giving a pretty pedestrian standard return of around 0.7%.
Not too good so far. But spend over £20,000 in a year, and you get one free 'companion ticket' when booking a flight, potentially doubling the reward to 1.4%. So if you're in a trusting relationship, it's worth you both spending on a joint card.
The card often gives sign-up bonuses too. Apply now and you'll get 9,000 Avios points when you successfully apply and spend £1,000 within the first three months. Compare this with the other frequent flyer cards in the Airline Credit Cards guide.
The 15.9% representative APR means you should make sure you pay the card off in full each month. See more ways to Boost Your Avios Points.
Lloyds Avios Amex Earn Avios miles (for BA & others)
- Representative variable rate: 22.7% APR Official APR example
- Annual fee: £24
- Reward scheme: Avios
- Value of 1 point: 0.86p
- Points per £100: 100
- Points' expiry: 36 months, if you don't earn or redeem miles in that time
- Taxes included? No
Apply for the Lloyds Avios Duo* and you get two pieces of plastic, an Amex and a Mastercard. Always use the Amex version where possible as it pays much higher returns; 1.25 Avios pointfor every £1 you spend. Plus, get double Avios points for 6 months from account opening.
If you spend £7,000/year you'll be sent a voucher for two flight upgrades, either for two single flights or one return journey. This means you can get a New York return upgrade to business class for the 60,000 Avios cost of premium economy, or to premium economy for the 40,000 Avios economy cost.
For more details on this card, see the full Airline Credit Card guide. The 22.7% representative APR means you should make sure you pay the card off in full each month.
Some cards only give rewards, vouchers or cash for certain retailers or when spending in a particular store. They can be useful if you like to shop at certain places.
Tesco Up to 1% for days out, restaurants, hotels, magazines & more
- Representative variable rate: 18.9% APR (Official APR Example)
- Annual fee: None
- Reward scheme: Tesco Clubcard Points
- Value of 1 point: Up to 4p on Rewards, 1p instore
- Points per £100: 25
- Points' expiry?: Points for 2 years, Rewards vouchers for an extra 6 months
The Tesco Clubcard Credit Card* gives one Clubcard point for every £4 you spend on it. One point is worth 1p (so just a 0.25% return) if spent in-store at Tesco, but boosts to up to 4p (so 1%) if redeemed for some of Tesco's special Clubcard Rewards vouchers. These can be used for a huge array of mainly entertainment-based treats.
For more details on boosting Tesco Clubcard points, read the Loyalty Points guide. The 18.9% representative APR means you should make sure you pay the card off in full each month.
MBNA More RewardsEarn points to spend at Argos, Debenhams, Next, Topshop & more
- Representative variable rate: 12.9% APR (Official APR Example)
- Annual fee: None
- Reward scheme: MBNA Reward Points
- Value of 1 point: 0.5p
- Points per £100: 200 with Amex
- Points' expiry?: N/A
The MBNA More Rewards Amex pays four Reward Points per £1 for the first 90 days. It also comes with a Visa card to use in retailers not accepting Amex, which pays two reward points per £1 for the first 90 days.
After that, you earn two points for every £1 spent on Amex and one point per £1 on Visa, so use the Amex as much as possible.
To get a £10 voucher - which can be used at around 100 retailers including Argos, Debenhams and Topshop - requires 2,000 points. You can redeem the points for cash too, but you'll need 5,000 to get £20 credited to your account and Top Cashback Cards beat this.
To redeem points and see what else you can exchange them for, you'll need to log into your online account.
Any gains made will be lost by 12.9% representative APR if you fail to repay in full. Set up a direct debit to ensure you don't forget.
Those are the top picks in each category; however we fully valued all the top rewards schemes, to reveal the best payers and the true return you get from any major rewards credit card.
All that data has been compiled into the RewardsChecker. Just enter your estimated spend over a year, and it'll tell you what you'll earn.
Use the free calculator at www.RewardsChecker.com
Boost the value of your points
Do remember, all these valuations are on average. For example, 1,500 Nectar points are worth £7.50 if redeemed in Sainsbury, but only £5.40 if used to buy one of the digital cameras on offer.
By correctly targeting the right rewards to redeem your points on, it is possible to substantially increase the amount. To find out how to do this for all schemes and specific info for Nectar, Avios and Tesco, read the Boost Your Loyalty Points guide.
Use the card for all spending
Once you set up a credit card, every time you use it you get paid. While this isn't an excuse to 'spend more', it does mean from now on…
Use the rewards card for ALL normal spending, replacing cash, cheques, and other debit, credit and charge cards.
For those who have work expenses they need to reclaim, this can be a powerful way to earn more, at no cost to you, provided you can cope with paying the bill in full each month.
There's extra protection on all spending too…
There's another big bonus to using a rewards card. You actually have far more consumer protection. This all comes about due to what's called Section 75 of the Consumer Credit Act 1974. It says…
75. - (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.
Which of course, reads like gobbleydegook… yet in a nutshell means:
Buy something costing over £100, here or abroad, and pay on a credit card, and the card issuer's equally liable if something goes wrong.
Now this protection only applies to credit cards, not debit cards or any other plastic and it's hugely important, especially in the current credit crunch climate. It means order something and if the retailer went kaput, you'd still be able to claim your money back from the card company. Read a full guide on Section 75 Refunds.
Avoid balance transferring to a reward card
In most cases, rewards are only earned when spending; balance transferring or cash withdrawals almost never count. From the beginning of 2011 the rules on where your credit card repayments are allocated changed.
Banks must now put any repayments towards the most expensive debts first. This means transferring a balance to a reward card isn't as bad as it used to be, but can still cost you if you're not careful.
Avoid balance transferring on a rewards card
Many reward credit cards try to tempt you with competitive balance transfer offers, they want you to both spend and shift debts to the card. It'll end up costing you as you're unlikely to be able to afford to repay the card in full. Instead use a separate card for Balance Transfers.
Never use credit cards for withdrawing cash
Withdraw cash and you'll often be charged a fee and you'll get penalised with heavy interest if you're unable to pay it off in full. The rule's simple: never, ever, ever use credit cards for cash withdrawals.
Think before adding the 'insurance'
Payment protection insurance is commonly sold with credit cards - the idea is it'll make some payments for you, usually for a year, if you are unable to (eg, if you lose your job).
There have been a myriad of cases where it has been mis-sold. Some borrowers didn't realise they were signing up for it, or it was totally unsuitable for them. Some big lenders have been fined.
The protection isn't always bad, though policies sold with cards are often overpriced (you pay a monthly amount depending on the size of your balance). If you want it, compare the lender's cover with standalone providers such as Paymentcare or Best Insurance.
Always be vigilant to check you aren't getting more than you bargained for when you fill in the application, then check your statement each month to check you aren't inadvertently paying for extras if you didn't ask for them.
Reward cards Q&A
I'm in debt, is it OK to use a reward card alongside my debt card?
How do they make money if I always repay?
The second source of income for card companies is the retailer. When you pay on a credit card, it gets between 0.1% and 5% of what you spend from the shop/restaurant and this will often cover the cashback.
Therefore in a way all you're doing is getting back the extra that's been factored in to pricing for all customers to cover credit card costs.
Generally, the bigger the retailer the less it pays, as it has more negotiating power with Visa or Mastercard. Also it's worth noting Amex tends to charge retailers more, one of the reasons some smaller companies don't accept it.
How many reward cards can I have?
As many as you're accepted for, there's no limit. Though of course, every card application has a small impact on your credit score. So the more you have, the less likely you are to be accepted for more cards.
Don't apply for lots if you may need credit for something important like a mortgage or a balance transfer card. Full info in the Credit Rating guide.
Is it worth going for a card that gives bigger rewards in one store?
If you spend a substantial amount of money in a store then it certainly is worthwhile. But don't let this blind you for the rest of your spending, make sure you maximise what you get elsewhere too (it may be worth having two cards).
Also remember lots of cards use a 'double earn' promise, so it looks like you get more points using your credit card in the linked store, but actually you would've got the same just using its normal loyalty card. See the Loyalty Points guide for a full explanation.
How often is this research done, what if it changes?
The research was last done in May 2012. However if there are any major changes to any of the headline cards listed, we try to update those specifically.
As long as never the twain shall meet that's fine. The golden rule (hopefully it's large enough above), is always pay the card off in full at the end of the month. So if you have one card for rewards which you pay off in full, and a separate card for your debts (be it a new spending or balance transfer card) then that shouldn't be a problem.