What is cashback?
As the name suggests, cashback is where you receive cash back when you spend. Retailers or finance providers use it as an incentive to reward customers for choosing to use their product or services.
Cashback credit cards (sometimes known as reward credit cards) give you a percentage of your purchase back, usually after a year of spending. You could trade your cashback for vouchers that can be used for hotels, travel, eating out and more. Often, receiving vouchers will boost the value of your earnings.
How much does a cashback credit card cost?
Cashback credit cards may sometimes come with an annual fee but generally, those that charge a fee offer a higher cashback percentage, so you can easily earn back the cost of the card. Make sure you consider all costs whilst comparing your options.
With cashback cards, you can expect APRs of anywhere between 15% and 50%, depending on your credit history. Check out your credit score before you apply so you know where you stand and can choose wisely.
Who can get a cashback credit card?
Generally, cashback credit cards are aimed towards those with a fair to good credit history. Don’t worry, if you have an unfavourable credit history there are still deals to be had and rewards to be earned. You can compare bad credit credit cards here. For customers to really feel rewarded from cashback credit cards, they need to keep their servicing of the card as low as possible. This means paying your balance in full every month and on time. This way, you aren’t spending the cashback you’ve earned.
So, if you know there is potential for you to be late with repayments or you spend more than you can afford, you should compare other cards. Check the market to see what’s out there, for example, 0% purchase cards.
Are cashback cards a good option?
If you have a favourable credit score and are sure you’ll clear your balance each month, cashback credit cards are a option worth considering. However with interest rates commonly higher than others in the market if you plan to have a outstanding balance for a period of time there are more suitable options out there.
Use our comparison table and compare all types of credit card in one place.
If you regularly use a credit card, why not make your money work for you? Although it may seem like you’re only earning small amounts of cash, it can all add up. Over the space of a year, you could earn back £100s. But remember, compare your options and be sure to double check the fees and charges to be sure you don’t pay more than you earn.