Cash-wielding shoppers losing out on plastic bonuses

By Lorrie Kelly Staff Writer Tuesday, 6 May 2008

No rewards for paying in cash By opting for cash instead of plastic, Britons are losing out on cash-back rewards: Can claw back £300 per year American Express Platinum pays 1.5% cash-back The same card gives 5% back on the first £4000 spent (ie. £200) What kind of reward credit cards are available? Compare Cash Back Credit Cards Compare Travel Rewards Credit Cards Compare Air Miles Credit Cards Compare Retail Rewards Credit Cards Related Money News See our other recent related news stories: Let a cash back credit card foot your holiday bill Even spending just £13,400 (the amount estimated to cover the cost of basic life in Britain) on a cash back credit card could pay for your holiday each year, calculates David Stevens as he compares the best cash back credit cards. Get interest free shopping at Tesco and Sainsburys Two of the UK's biggest supermarket giants have just launched 0% credit cards that not only give you interest free shopping at their tills for a year, but also load you with extra points on their reward cards.

WITH the credit crunch tightening its grip on business and consumer alike, it’s no wonder that a recent survey has revealed that cash is the new plastic.

The British Retail Consortium ‘s poll of more than 17,000 UK retailers showed that 60% of their total sales were paid in cash during 2007, a 6% jump from the same survey conducted in 2006.

Many consumers state they feel more comfortable spending cash they know is to hand, thereby avoiding the risk of incurring unnecessary debts from credit card interest rates which would further inflate their monthly budgets.

Short sighted

But this view may be short sighted and in fact prevent shoppers from making the most of their money.

According to Fairinvestment.co.uk, more than half of all UK credit card shoppers use their cards responsibly by treating their card purchases as cash and only spending what they can comfortably afford to pay in full every month.

These consumers could reap the long term benefits of cashback rewards, air miles and other incentive programs that can yield the average British household between £200 and £300 per year in bonuses.

Reward

Cashback and incentive credit cards reward consumers for the amount of qualifying purchases they make per year.

You can compare all cash back and other rewards cards on our dedicated credit card comparison pages.

Typically, the bank will calculate a flat rate against all spending (or for some programs, on particular purchases such as airline tickets) and rebate the customer at the end of the year.

For example, the American Express Platinum credit card pays up to 1.5% cashback annually for all purchases plus, as an introductory offer, Amercian Express will pay 5% on all purchases totalling up to £4000.

The type of bonus is dependant on the credit card you choose.

The best deals can be found by shopping around for a card that suits your spending habits, such as bonus air miles if you book a lot of travel or a cashback credit card if you use your credit card mainly for general household purchases.

Avoid interest

It is an established fact within the lending industry that credit card companies profit from consumers who make only their monthly minimum payments, thus carrying over balances that can accrue between 12% and 39% annual interest.

So, to make the most of the rewards on offer, buyers are cautioned to pay their credit card statements in full every month and so avoid costly interest that, in almost all cases, totally nullifies bonus profits.