The best credit cards for cashback

Cashback credit cards reward you on your everyday purchases, paying you back a percentage of what you spend.

American Express (Amex) has recently improved its offering on its Cashback Everyday credit card, making it the best cashback deal on the market. It now returns the top cashback credit card rate in the UK of 5% on up to £125 over five months.

When new rules were introduced in 2015 restricting the amount card issuers could charge merchants, the number of cashback credit cards on the market dropped and the market has struggled to recover.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

But, there are still some good deals out there, to help you make the most of your spending. Also consider other ways to earn cashback, from signing up to cashback sites to getting up to £2,000 cashback when you transfer your pension or ISA. 

What are the best cashback credit cards?

American Express Platinum Cashback Everyday Credit Card

• 5% cashback (up to £125) on purchases in the first five months
• 0.5% cashback on up to £10,000 after the first three months
• 1% cashback on anything over £10,000
• Cashback paid annually

This credit card boasts the highest cashback rate compared to other UK credit cards. It is available to new cardholders and gives you 5% cashback on purchases of up to £125 for the first five months of card membership.

The card has no annual fee. If you fail to pay in full, there’s a representative APR of 31.0%.

American Express Platinum Cashback Credit Card

• 5% cashback on purchases in the first three months (up to £125 cashback)
• An extra £25 bonus cashback (which covers the £25 annual fee to hold the credit card)
• 0.75% cashback on up to £10,000 after the first three months
• 1.25% cashback on anything over £10,000
• Cashback paid annually

This credit card from American Express is slightly more generous than the Everyday Credit Card, but it costs £25 a year. At 36.7% the representative APR is higher if you fail to pay in full, too.  

Lloyds Bank World Elite Mastercard®

• 1% cashback on purchases totalling above £15,000
• 0.5% cashback on all purchases up to £15,000
• £15 monthly fee to hold the credit card
• Includes perks such as a priority pass to more than 1,300 airport lounges worldwide and access to Mastercard experiences and offers

Cashback will be paid monthly to your credit card. If you can’t pay in full, the representative APR is 55.0%. Also, this card charges a 2.95% fee on all foreign transactions.   

Santander All In One Credit Card

• 0.5% cashback on all purchases (up to £10 a month)
• 0% interest on purchases for 15 months
• 0% interest on balance transfers for 15 months, with no balance transfer fee
• £3 monthly fee

This credit card gives 0.5% cashback on all purchases. It also has no foreign exchange fees on purchases overseas. However it does incur a monthly fee of £3, or £36 a year, and has a representative APR of 29.8%. 

Santander Edge credit card

• 2% cashback on all purchases (up to £15 a month) in your first year
• 1% cashback on all purchases (up to £15 a month) after your first year
• No foreign exchange fees when spending overseas 

This credit card comes with a £3 monthly fee. To qualify for this account, you must already hold a Santander or Cahoot current account. 

The card comes with a purchase rate of 23.9% per annum and if you can't pay in full, the representative APR is 29.8%. 

How do cashback credit cards work?

If you have a credit card that gives you cashback at say a rate of 0.5%, for every £100 you spend, you get 50p back. As attractive as the promise of free money sounds, there are downsides too.

A lot of credit card companies offer attractive cashback rates for only a fixed period of time, such as the first three months. And in order to get the most out of using cashback credit cards you need to be mindful of two things: you must use them for all your spending (but watch out for credit card fees with any purchases) and you must pay off the full amount every month.

The introductory cashback offers could be useful if you know you're going to be buying something expensive – getting a 5% discount isn't to be sneered at. But if you carry a balance over just once, the resulting interest charge could wipe out any cashback savings you make.

It is also worth noting that cashback credit card providers often charge a fee and typically offer uncompetitive interest rates. Some also require a minimum spend before you can generate cashback savings. As with any credit card, be careful to pay it off in full to avoid being charged interest, and always check the terms and conditions to make sure the card is the right one for you.