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By David Stevens
Personal Finance Correspondent
Thursday, 3 July 2008
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 American Express Platinum
- Up to 5% cash back (intro period)
- From 0.5% to 1.5% cash back
- 18.9% APR
- Must have household income over £20k
 Apply Now
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Shoppers losing out on cash back rewards
With news that shoppers are increasingly turning to cash rather than plastic for their shopping, millions of pounds in cash back rewards are being squandered, reports Lorrie Kelly.
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IF reports that a single person in Britain needs to earn at least £13,400 a year to maintain a minimum standard of living are correct, then banks offering cash-back credit cards should prepare themselves for a stampede.
With even this modest annual expenditure, a person making all annual transactions on a cash back credit card and paying them off in full and on time each month, will be able to earn over £200 a year.
That’s enough for a week in the Mediterranean, every year, for ever.
What is a cash back credit card?
Cash back credit cards are a type of credit card that gives back a small percentage of what you spend using the card.
This is usually between 0.5% and 1.5% of total spend, but some cash back credit cards’ introductory periods can offer as much as 5% cash back.
You can compare cash back credit cards here.
How to compare cash back credit cards
When you compare cash back credit cards – of which there are currently not many – the most important thing to look out for is the cash back rate.
What is the cash back rate?
Don’t believe the figure you see in the cash back credit card comparison tables, however, as these are likely to show the highest cashback amount the card offers – which usually only lasts a few months.
To really compare cash back credit cards you need to look at the small print and see the various tiers of cash back rewards available.
These will almost always be a more sobering than the flashing rates they try to suck you in with.
Is cash back offered on all purchases?
Also make sure the cash back being offered is applied to all purchases you make on the cash back credit card and not just cash back from purchases made at selected retailers.
Some cash back credit cards, such as the Egg credit card, only offer (admittedly generous) cash back from selected retailers.
What is the APR?
If you are going to use cash back credit cards successfully, you should never have to come onto the receiving end of the credit card’s APR as this will instantly wipe out any benefits you’ve scraped together from your cash back.
However, keep in mind that since you will be buying everything on the cash back credit card to ensure you get the most cash back, any failure to pay the full amount off in full and on time will see that APR kicking in – which could work out expensive.
What is the best cash back credit card?
If you compare cash back credit cards, the current leader of the pack is the American Express Platinum credit card, offering an introductory cash back rate of 5%.
Realistically though, you’ll be earning 1.5% cash back if you spend more than £10,001 in a year on the card.
So spend your entire £13,400 using the American Express Platinum credit card and you’ll bag yourself £285 in the first year, and another £201 a year, every year thereafter.
Ready to stampede yet?
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