Credit card rewards

Getting charged interest almost always scuppers even the very best reward schemes, so quite simply…

If you want rewards, always set up a direct debit to repay the card in full each month, so interest doesn't wipe the gain.

By doing this, you've effectively made your credit card a debit card, but one that pays you every time you spend on it. Just make sure you stay within the credit limit or you'll pay charges.Sadly, some card providers deliberately miss the 'repay in full' option off when you set up your direct debit.

If it's not there, call the lender and ask them to make sure the direct debit is set up to pay off in full.If you're not sure that you'll always be able to repay the card in full, DON'T pick a reward card. Focus on a card with a lower interest rate instead – see our 0% interest free credit cards guide.

Once you've got a reward card, you get paid almost every time you use it. 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 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 reward points, at no cost to you, provided you can cope with paying the bill in full each month.Do check it's fine with your employer though, as there's a chance it could be seen as a taxable benefit (you'll still be up even if it is).

Can I add an additional cardholder to my account to boost cashback or reward points?

Yes, you can. Though with credit cards there's no such thing as a joint card – it's your card and you're giving them permission to spend on it. Any spending is yours to pay off, not theirs.

Some schemes are focused on making people think they're earning large, when actually payouts are pretty paltry, so go through our best buys below meticulously to check which you'll actually get value from. Broadly, there are two types of scheme...

• Cashback. This is the most straightforward type of scheme – for every pound spent, you get a certain amount back, for instance, 1%. But watch out for tricky terms – cashback tends to be paid annually as credit to your statement, and some cards have a minimum spend requirement to get any cashback.

• Rewards schemes. Here you earn days out, flights, holidays and more by getting points – and that's where the problems can start. Always ensure you know what a point is worth.
  
  Generally, most cards in this guide have one point being worth between 0.5p and 1p. If you're not sure, check BEFORE you take the card out.

Boost the rewards you get

By correctly targeting the right rewards to redeem your points on, it's possible to get bonus points or substantially increase the amount. To find out how to do this for all schemes and specific info for Avios – which give airline points for British Airways and other airlines in the Oneworld group – Nectar and Tesco, read our Boost your loyalty points and Avios boosting tricks guides.

All credit card applications have a slight short term negative impact on your credit worthiness, so you need to weigh up whether getting a reward card now could harm other, more important credit applications you may have on the horizon, like a mortgage.A single application may not kibosh your chances, but together with other negatives, it may well do. See Credit score boosting for more tips.Additionally, if you’ve debts elsewhere, you'll save more by keeping your debts cheap instead of going for reward cards. See Best balance transfers for the top credit card debt-cutting cards and Debt problems for full step-by-step help.

They're a tool to get you rewards by using them like a debit card and clearing them each month, and we rate them based on that.If you need to borrow as well, you're far better off focusing on getting the lowest interest rates – that'll save you much more money. See 0% credit cards for spending and Best balance transfers for more info.And when it comes to withdrawing cash, the rule is simple – never, ever, ever use these cards for cash withdrawals, as you'll often be charged a fee and interest, even if you pay the card off in full.

Yes – with a credit card. Another bonus to using a rewards credit card is you have far more consumer protection. This all comes about due to what's called Section 75 of the Consumer Credit Act 1974. It means that if you buy something costing between £100 and £30,000, here or abroad, and pay on a credit card, 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 (so if you opt for the Chase card, for example, you won't get it), and it's hugely important. If a retailer were to go kaput, you'd still be able to claim your money back from the card company.

However, Section 75 protection doesn't apply to additional cardholders – so ensure that any big purchases are made by the main cardholder.

But be aware of using PayPal to pay on a credit card, as you'll lose this valuable Section 75 protection. Read the full guides to Section 75 refunds and using PayPal to pay on a credit card.

While customers paying interest is a big source of income for the card company, it's not the only one.

The second is the retailer. When you pay on a credit card, the card company gets a small percentage 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.

It's worth noting that Amex tends to charge retailers more than they pay when you use a Mastercard or Visa, which is one of the reasons some smaller companies don't accept it.

As many as you're accepted for – there's no limit. Though of course, every credit 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, such as a mortgage or a balance transfer card. Full info in our Credit rating guide.

If you spend a substantial amount of money in a store then it certainly is. 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 that 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 our Loyalty points guide for a full explanation. 

This largely comes down to two things – which rewards you value and which cards will accept you. 

Generally speaking, reward credit either offer cashback on spending or award you loyalty points as you spend, which you can typically convert into vouchers or air miles. Take a look at our top-pick cards above to compare the rewards on offer, and decide which you would make use of the most. 

Our Reward Credit Card Eligibility Calculator will then show you the acceptance odds for most of the top cards before applying. Usually the best bet is to go for the card with the best acceptance odds that meets your needs.

Once you have a card and to max rewards, do all your normal spending on it – though it's not an excuse to overspend. But if you don't always repay in full (or can't), then don't bother as the interest will dwarf the rewards.

Reward cards give you cash or loyalty points when you spend on them. So as long as you repay them IN FULL each month (preferably by Direct Debit so you never forget) and don't bust your credit limit, you neuter the 'debt element' of the card, and just have plastic that pays you to spend on it.

You'll find our top-pick reward cards above, though you'll need to compare them to determine which rewards you value the most. Our Reward Credit Card Eligibility Calculator will then show you the acceptance odds for most of the top cards before applying.

Amex points give you a choice of rewards (with varying values), so what to go for will come down to both your preferences, and how best to maximise the value. You should receive points within a couple of days after spending, though they can take up to 30 days.

Here are the main uses of Amex points:

- Convert them Nectar points. One Amex point is worth 0.5p. Nectar points can be spent at any Nectar partners, including Sainsbury's supermarket, eBay, and Argos. 

- Use them to buy shopping vouchers/gift cards. One Amex point is worth 0.5p. Choose from retailers such as Amazon, M&S and Currys.

- Use your points to pay online. One Amex point is worth 0.45p. Choose from retailers such as Aldi, Asda and Boots. Generally you'll be offered this way to pay at the till when you check out on the retailers' sites.

- Airmiles/hotel points. The value of each Amex point varies depending on the scheme – choose from Avios, Virgin Red, Hilton Honors, and more.

You can see a full list of ways to redeem your points on the Amex Membership Rewards site.