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By David Stevens
Personal Finance Correspondent
Wednesday, 5 November 2008
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Cash Back Credit Cards
The best cash back credit cards right now are:
 Compare cash back credit cards
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A guide to compare cash back credit cards
Find out more about cash back credit cards and how to compare credit cards that offer cash-back in this definitive guide to cash back credit cards.
Credit cards in short supply
There was once so much choice, but now anyone taking the time to compare credit cards will notice a distinct dirth in the choice of credit cards - especially cards that give something back reports Claire Stevenson.
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IF you are one of the millions of Britons who use a debit card, cheque or cash to pay for everyday household expenses, you could be losing out on as much as £380 a year, according to new research.
American Express has revealed that the average UK household spends enough on everyday items to earn them back as much as £380 if all those items had been paid for using a cash back credit card.
The news comes just in time for Christmas, when households traditionally spend significantly more than usual.
Moreover, as Britons increasingly pay more attention to the looking after the pennies than at any time in recent memory, the news becomes sharply more pertinent.
What is a cash-back credit card?
Cash back credit cards work much like any normal credit card, except for one major difference: they reward you a small percentage for spending on the card.
Generally a cash-back credit card will offer an introductory rate – possibly for the first 3 months – at a higher percentage, dropping down to a much lower, but still significant percentage thereafter.
A percentage between 1% and 5% of what you spend is normal for cash-back credit card. In real terms this means you get between a penny and 5p back for every Pound you spend.
Added up over all your outgoings, these pennies turn into Pounds quickly.
What’s the catch with cash-back credit cards?
Why on earth would credit cards give money away like this?
Quite simply, they are hoping you spend gleefully on the cash back credit card and conveniently hoping you forget to pay off what you spend in time.
They’ve worked out enough people will be fooled by the lure of cash back, or won’t be disciplined enough to pay off their balance in full each month.
So the catch is that you could land up spending more than you should, with the little voice in your head prompting you to spend more to earn more.
So long as you are disciplined about paying the balance of your cash back credit card off in full and on time each month, you too could see yourself bagging a few extra hundred pounds for nothing.
What are the best cash-back credit cards?
As we reported last week, credit cards offering decent rewards have dwindled alarmingly over the last 6 months.
Right now, the best cash back credit cards are:
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5% cash back for the first 3 months (based on £4000 spend max)