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Cashback Credit Cards 5% cashback for first 3 months

Cashback credit cards pay you every time you spend on them, possibly £100s a year. The top card pays 5% cashback for the first three months, others give 3% on fuel and transport spending.

There are also some good fee-free, near-cash reward cards which come close to what cashback cards can offer. We analyse the pros and cons of all.

Cashback cards: The best way to use them

Cashback credit cards are a form of reward scheme, yet rather than giving points, you get cold hard cash, tax-free, every time you spend on the card. Cash is totally flexible - you can spend it on anything - and it's easy to compare, so it comes up trumps for almost everyone.

But before you start mentally counting the cash, ALWAYS follow...

The golden rule of cashback cards

Set up a direct debit to repay the card in full each month, so you never pay interest, which would outstrip any gain.

The reason card companies offer cashback or reward schemes is simple. They want to encourage you to spend on the card and pay them interest. The interest cost of all cashback cards dwarfs the cashback you'll earn.

The easy way to pay off IN FULL

Paying off the price tag

The best way to pay off in full each month is via a direct debit. It allows the card provider to take a variable monthly amount to correspond with what you owe it (see the Direct Debit guide).

Sadly, some providers deliberately omit the 'pay off in full' option from direct debit forms, as it means they'll make less money. If so, just write in 'pay off in full' yourself. The firm should honour it, but call after a week or so and check it's worked.

By doing this, you've effectively made your credit card a debit card, but one that pays you every time you spend on it. Always make sure you have enough cash in your account to cover the direct debit.

It may sound obvious, but always stay within your credit limit. Otherwise you'll be hit by £12 charges.

Best buys: The top cashback deals

If you've not had a cashback card before, or are about to embark on some big (but planned-for and affordable) spending, you've a choice between a card that pays the highest short-term bonus rate of cashback (then a decent rate after), or one that pays good long-term cashback.

One thing to consider is whether you want an Amex or a Visa/Mastercard (the former is accepted by fewer retailers). You also need to think about whether you want to pay a fee - the cards with the highest cashback tend to have an annual fee.

Pre-apply to check eligibility with NO credit file mark

You'll see that most cards in this guide have a link to our eligibility checker tool, which we've designed to allow you to see the probability of getting the card.

We do a 'soft' credit search which YOU can see, but lenders CAN'T, so it has no impact on your future creditworthiness - and lets you see the chance of you getting the card without applying for it.

We map the details you give us against lenders' criteria, and show your chances for all the cards on this page that we can do so for. A new development allows us to check without you following a link from a specific card.

Fee-FREE cashback cards

American Express logo

Amex Platinum Everyday *5% intro cashback + up to 1.25% after

  • Cashback: 3mths 5% (max £100) | Tiered up to 1.25% after.
  • Paid out: On card anniversary | Max cashback/year: N/A
  • Annual fee: None | Min spend: £3,000 per annum
  • Rate: 19.9% representative APR (see Official APR Example)
  • Min income: £20k household salary

The American Express* Platinum Cashback Everyday card (you can use our eligibility checker for this card) is the top fee-free card, especially if you've big spending to do, as you can get 5% back on spending up to £2,000.

This card is similar to the Amex Platinum below, but differs in the fact that it has no annual fee. While the Amex Platinum pays an ongoing 1.25% cashback after the intro period, this card has tiered rates of cashback up to 1.25%.

This means the Platinum Everyday card beats the £25 annual fee Amex Platinum if you spend £5,000 or less, but for higher spenders, the card with the fee works out as more profitable.

Once you've spent £2,000, you'll automatically be put onto the tiered spending rates so spend £0 to £3,500 and you get 0.5% cashback (though the initial £2k spend at 5% counts towards this). From £3,500 to £7,500, you get 1%. All spending above £7,501 gets the full 1.25% cashback.

Set up a direct debit to pay in full every month when you get the card, otherwise any cashback you earn will be quickly eaten up by the 19.9% representative APR.

Capital One Classic Extra Cashback Card

Capital One Classic Extra* for those with poor history: 0.5% cashback + £10

  • Cashback: 0.5%
  • Paid out: Every January
  • Max cashback/year: Unlimited
  • Annual fee: None | Min spend: N/A | Card issuer: Mastercard
  • Rate: 34.9% representative APR (see Official APR Example)
  • Min income: N/A

The Capital One* Classic Extra (you can use our eligibility checker for this card) pays 0.5% cashback on all spending. It's suited to people who have a limited or patchy credit history.

As this card is aimed at those with credit issues, the interest rate is huge. So it's even more vital that you ALWAYS repay in full every month, otherwise you'll be charged 34.9% representative APR. Credits limit are also low; between £200-£1,500.

There's a £10 annual bonus credit for customers who make all bill payments on time, which helps to supplement the cashback rate. There's no minimum income needed and it won't automatically exclude those with CCJs or defaults over a year old.

High level cashback cards - with a fee

American Express logo

Amex Platinum* 5% intro cashback + 1.25% after

  • Cashback: 3mths 5% (max £125) | 1.25% after.
  • Paid out: On card anniversary | Max cashback/year: N/A
  • Annual fee: £25 | Min spend: N/A
  • Rate: 18.7% representative APR incl £25 fee - spending is charged at 14% (see Official APR Example)
  • Min income: £20k household salary

The American Express* Platinum Cashback card (you can use our pre-application eligibility checker for this 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. However, it also charges an annoying £25 annual fee.

If you spend over £10,000 in a year, you'll also get 2.5% cashback in your anniversary month. Ensure you repay in full every month to avoid the 18.7% representative APR.

Good if... you're likely to spend £5,000+.

While the flat rate after the intro rate is a bonus, the annual fee wipes away some of the gain. If you spend less than expected, you'd still be hit with the fee, making it less profitable. If you're not sure you're going to spend big, then try the Amex Platinum Everyday - the deal is similar, though cashback rates are tiered, but there's no annual fee.

Santander Logo

Santander 123 Cashback* up to 3% cashback on spending + 18 mths 0% on spending

  • Cashback: 3% on petrol/transport (max £9/mth), 2% in dept stores, 1% in supermarkets, flight, hotel and travel agent bookings. NONE elsewhere
  • Paid out: Monthly
  • Max cashback/year: N/A (but £9/mth on petrol/transport)
  • Annual fee: £24/year | Min spend: N/A | Card issuer: Mastercard
  • Rate: 16.5% representative APR (incl fee). 12.7% interest on spending (see Official APR Example)
  • Min income: £7,500

The Santander 123* credit card (don't confuse it with the similarly-named bank account) pays up to 3% back on everyday spending in supermarkets, department stores & fuel/rail travel (plus, you can use our eligibility checker for this card).

And for a limited period, in June, July & August 2014. there's bonus cashback if you're planning a holiday. You get 1% back on flights, hotels and travel agent bookings.

This card also has 0% on purchases for the first 18 months, but it does have an annoying £24 annual fee (though it's refunded in the first year if you have a 123 current account - a top pick bank account). If you spend big on petrol or travel, or in supermarkets, this should wipe out the annual fee quite easily, though it still eats the gain.

After the end of the 18 months 0% period, you'll be charged 12.7% interest on any remaining balance or any future spending that's not paid off in full each month - all of which will quickly eat up any cashback gain.

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'Close to cashback' deals

Some reward credit cards come close to cashback cards, especially those where you can spend points in huge stores that stock a wide range of goods. These are the best, where the returns get close to cashback cards.

Amex Preferred Rewards Gold Card

Amex Gold* - Bonus £100 vouchersEARn points to be exchanged for vouchers

  • Cashback: 1% (plus 20,000 bonus points)
  • Paid out: Monthly
  • Max 'cashback'/year: Unlimited
  • Min spend: £2,000 for bonus | Card issuer: Amex
  • Annual fee: No fee in year 1. £125 from year 2 onwards
  • Min income: £20,000

Surprisingly, this is a charge card, not a credit card. But accepted new Amex Preferred Rewards Gold* charge card (you can use our pre-apply eligibility checker for this card) holders get 20,000 Rewards points when they spend £2,000 in the first 3 months.

It usually has a £125 annual fee, but for now is fee-free in the first year. To avoid paying £125, diarise to cancel before year two starts.

You earn 1 point per £1 spent on your card. This is boosted to 2 points per £1 when spending on travel (plane fares, rail fares etc) and when spending abroad. You also earn 2 points per £1 on petrol and supermarket spending for the first year.

What can 20,000 pts get you? You can convert the Membership Rewards into £100 in gift cards for M&S, Homebase, House of Fraser, PC World and more.

Alternatively, you can convert them to frequent flyer or hotel scheme points and add them to your current stash. They can be converted into 10 frequent flyer programmes (including Avios and Virgin Atlantic), or five hotel reward schemes, among other things.

How do CHARGE cards work? Charge cards allow you to spend on them, but require you to pay off in full at the end of EVERY month - set up a direct debit to ensure you don't forget.

There's no interest charged, but there's a £12 fee - and a default on your credit file - if you fail to fully repay within 10 days of getting your statement. You'll also be credit scored on application to assess your likelihood of paying back.

M&S Credit Card

M&S* - 0.5% back in vouchersPlus 15 months 0% on purchases

  • Cashback: 0.5%
  • Paid out: Quarterly
  • Max cashback/year: Unlimited
  • Annual fee: None | Min spend: N/A | Card issuer: Mastercard
  • Rate: 16.9% representative APR (see Official APR Example)
  • Min income: N/A

The M&S* credit card (you can use our pre-application eligibility checker for this card) gives one point per £1 spent at M&S, and 1 point per £2 spend elsewhere. For a limited time you'll also get a £30 drinks voucher if you apply through the above link by 31 Aug and make a purchase before 30 Sept.

You'll also receive 500 bonus points, worth £5 on your first spend in M&S stores.

You'll earn 1 point for every £1 spent in M&S stores and 1 point for every £2 spent elsewhere. Points are converted into Marks & Spencer vouchers four times each year. The points are equivalent to 0.5% back on most purchases (50p per £100 spend) and 1% when you spend in M&S.

After the 0% period ends, all spending is charged at 16.9% representative APR, so follow the cashback cards Golden Rule, and set up a direct debit to pay the card off in full.

Tesco Clubcard Credit Card

Tesco* Up to 1% for days out, restaurants, hotels, mags & more

  • Eligibility check not available
  • Apply*
  • Cashback: up to 1%
  • Paid out: when redeemed
  • Max cashback/year: Unlimited
  • Annual fee: None | Min spend: N/A | Card issuer: Mastercard
  • Rate: 18.9% representative APR (see Official APR Example)
  • Min income: £5,000

The Tesco Clubcard Credit Card* gives one Clubcard point for every £4 you spend on it, though spend in Tesco or on Tesco fuel and this is boosted to 5 points for every £4 spent.

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. You get 19 months 0% on spending, but after this the representative rate is 18.9% APR, which means you should ensure you pay the card off in full each month.

If you prefer other schemes, like collecting Avios or Nectar points, then see the Credit Card Rewards and Airline Credit Cards guides for more information.

Cashback cards
Video guide

Video courtesy of It Pays To Watch, Channel 5
Originally broadcast in April 2008

Can you get more free cash from credit card companies?

Free cash from credit cardsCredit card companies throw serious cash at marketing in order to get their cards in our pockets. For those who don't need to borrow, it's possible to ride this wave of freebies to be quids in. There are two other ways to make money from credit cards.

  • Stoozing
    This is an advanced technique where you take advantage of the fact that many credit cards lend money for a short time at 0% interest. Spend on that card instead of your debit card, then stash your salary in a high interest account and you'll be quids in. Full Guide: Stoozing
  • Credit card freebies
    Many credit cards offer incentives like gift cards or vouchers for free flights if you 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. Full Guide: Credit Card Freebies

Think before adding the 'insurance'

Thinking about payment protection insurancePayment 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).

But in many cases it has been mis-sold - borrowers didn't realise they were signing up for it, or it was totally unsuitable for them - and 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.

There's extra protection on all spending too...

There's another big bonus to using a cashback 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, which 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 gobbledegook. Yet in a nutshell, it 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. If you ordered 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 to Section 75 refunds.

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