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Guide to applying for a cashback credit card

Guide to applying for a cashback credit card
Written by Mark Grimley
Published on 5th July 2017
Updated on 23rd August 2018
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What's a cashback credit card?

A cashback credit card earns you money while you shop. Your groceries, electricity bills and petrol can all contribute to earning you extra money. This might seem like a good deal but unless you choose your card carefully and manage your money well, it could end up costing more than it makes. There are some important considerations that you will need to think about, in order to make the most of your cashback credit card. So the Choose Wisely guide to applying for a cashback credit card is here to help.

Make the most of your cashback

For a cashback card to be an efficient tool you have to pay it off in full each month. Cashback amounts that can be earned are sometimes much lower than a lot of the APRs on cashback credit cards. If you aren’t careful you could easily pay more in interest and fees than you get back.

Credit score and eligibility

The cashback bonus is often offered to individuals with good credit scores and there might be income thresholds too. You can check your credit report yourself so that you only apply for credit cards that match your financial circumstances. You will also have the chance to update your details and check your report is accurate. Some companies give you the option to see if you qualify, without harming your credit score. Otherwise, each check or application will leave a mark on your credit history whether you take the card or not.

Check fees, exclusions and cashback rates

These cashback credit cards offer the most value when they fit in with what you are already spending. Unfortunately, different credit card companies will have different terms and conditions. These might include purchases that are not eligible for cashback or variable rates of cashback for different types of purchase. There may also be limits on the amount of cashback per transaction, amount, month or year. Cashback rates are often higher in the first few months of a new credit card and then drop after a certain amount of time or spending. So don’t just look at the deal at the start, think about the long term after any introductory offers have ended. There might also be monthly or annual fees on cashback cards. Even though they are likely to be small, around £5 or less, they will still eat into your cashback profits. Remember to take them into account when working out the value of your cashback and any budgeting on repayments.

Manage your money

Whenever you are using a credit card you need to manage your money responsibly and meet your payments each month, or you will incur fees and damage your credit score. If you build up a balance or miss a payment your cashback value will be wiped out by the charges and interest. For the best value from your cashback card, you should pay off your balance each month and on time.

Retailers’ own cashback cards

Retailers, including supermarkets, have started offering their own financial products or acting as intermediaries to other banks. Some cashback cards are from a particular shop or supermarket and will offer extra cashback for purchases made there. If you do a large amount of shopping at one particular supermarket, use their other financial products, or buy your fuel there, it might be worth looking at their cashback credit card. You will also need to check the interest rates so that you aren’t spending your cashback on higher rates for the rest of your spending.

Find credit cards for bad credit

Have bad credit? Have a look at the full range of credit cards and compare your options using a Choose Wisely comparison table.

Mark Grimley
Written by
Mark Grimley
Head of Partnerships & Take Control Author at Choose Wisely

Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.