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By Julia Kukiewicz Staff Writer
Monday, 13 October 2008
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Compare Credit Cards Offering Cashback
The Three Best Cash Back Credit Cards
For each credit card see how much cash back you can get after the first year if you spend £500 a month and don’t pay any interest.
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IT sounds too good to be true: a credit card that rewards your spending by putting money straight back in your pocket.
But cash back credit cards are for real and – used right – they can be the perfect way to save as you spend, especially during high-spending periods such as Christmas.
How do Cash Back Credit Cards work?
All cash back credit cards work in slightly different ways.
A percentage of the amount you have spent on your credit card during the year will be calculated and added to your balance. So the more you spend, the more you’ll earn.
Look out for restrictions, however.
Cash back covers purchases only, not balance transfers or cash withdrawals, and some cash back credit cards only offer money back when you spend in certain places.
For example, with the Egg credit card you only earn cash back when you spend in certain places – such as Lastminute.com - but the cash back rate is a massive 10%.
And with the Barclaycard OnePulse you can earn 0.5% on normal purchases but 5% on Transport for London transactions.
Should I get a Cash Back Credit Card?
A cash back credit card will be suitable for you if you make a lot of purchases on your credit card but rarely - if ever - carry over your balance past the interest free period.
If you rack up a lot of interest payments on your cash back credit card, you’ll be earning money off your interest but you would probably still be better off with a low rate credit card.
You’ll get the absolute best out of your cash back credit card, though, if you avoid all interest.
The only exception to this general rule is Capital One’s Low Rate credit card with cash back.
With a 8.5% interest rate, it won’t break the bank to carry over your balance once in a while, but the card offers a cash back rate of just 0.5%.
The best way to work out the best cash back credit card for your spending is to use Choosemoney’s cash back credit cards comparison chart.
Just enter the amount you spend in an average month and the amount you will be able to pay off during the interest-free period to find how much cash back you can earn.
 Compare cash back credit cards here
What should I watch out for with a Cash Back Credit Card?
Stop and think for a minute why on earth a company would give you cash-back just for using their credit card?
If you havent guessed, it's because they want you to spend wilfully on it and, hopefully, get yourself into a bit of trouble and either forget to pay off the balance on time each month - or struggle to pay it off at all.
In both instances they don't have to pay you any cash back, and they land up earning a wad of interest payments.
So the golden rule of cash-back is to always pay the balance back in full, on time each and every month.
Missing a single payment - even by days - will see you paying significantly more in interest than you would have earned in cash-back.
The Best Cash Back Credit Cards
Here are Choosemoney’s top three cash back credit cards:
The American Express Platinum Credit Card offers 5% cashback for the first three months and then up to 1.5% thereafter. You can get up to £200 during the first three months.
Apply for the American Express Platinum Credit Card now!
The Barclaycard OnePulse credit card is the perfect credit card for London commuters. As well as a built-in oystercard, it offers an amazing 5% cash back when you spend at Transport for London and 0.5% on all other purchases, up to a maximum of £15 on each per month.
Apply for the Barclaycard OnePulse credit card now!
Finally, there is the Egg credit card, perfect for online spenders. You can earn up to 10% with big online retailers such as LastMinute.com, 0800flowers, Dixons.co.uk and Truprint.
Apply for the Egg Credit Card now!
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