Cashback credit cards reward you on your everyday purchases, paying you back a percentage of what you spend.
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.
But, there are still some good deals out there worth knowing about to help you make the most of your spending.
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For example, high-street lender Santander has just launched its new Edge credit card offering cashback and fee-free spending abroad.
Plus, there are other ways you can earn cashback too, for example by signing up to cashback sites or getting up to £5,000 cashback when you transfer your pension or ISA.
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.
What are the best cashback credit cards?
American Express Platinum Cashback Everyday Credit Card
- 5% cashback (up to £100) on purchases in the first three 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, available to new cardholders, gives you 5% cashback on purchases of up to £100 for the first three months of card membership.
You receive 0.5% cashback on spending up to £10,000 each year, and 1% cashback on spending above £10,000.
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)
- 0.75% cashback on up to £10,000 after the first three months
- 1.25% cashback on anything over £10,000
- Cashback paid annually
- £25 annual fee to hold the credit card
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. (Note, from 30 January 2024 the maximum cashback you can earn will be capped at £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%.
Plus, if you're a Santander or Cahoot current account holder, you can open a Santander Edge credit card which has a £3 monthly fee.
The newly launched credit card is offering customers 2% cashback on purchases in year one and 1% cashback thereafter, capped at £15 a month.
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%.
An extra perk- the credit card offers fee-free spending abroad.
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.
If you have existing credit card debt then you might want to consider a 0% balance-transfer credit card instead.
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