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Last updated: 23/07/2020 | Estimated Reading Time: 4 minutes

Cash back credit cards

Cash back credit cards can earn you cash for every pound you spend using them. If you can afford to keep up with repayments to counteract the relatively high APR, these rewards based cards can be a great help with the cash back earned acting as an incentive to use them regularly.

We’ll go over the details of cash back cards and help you decide whether or not one would be right for you.

In This Guide:

How do cash back cards work?

ash back credit cards work by offering you a percentage of everything you spend back as cash when you use them.

So, say your card offers you 1% cash back on all purchases. If you spend £2500 on the credit card in question, you’ll get £25 back.

Some card issuers will operate a tiered system when rewarding cash back. For example they might reward you with 1% cash back for everything you spend up to £5,000, and then on everything above this you might earn 1.5%.

Often, cash back credit cards will have some kind of introductory bonus period during which the cash back rate is much higher than it would be normally. If this is the case, you should take full advantage of this period by using your card as much as you reasonably can, while making sure you don’t spend beyond what you can pay back each month.

How exactly you receive the cash back that you earn will depend on the card issuer’s policy.

Sometimes it will be credited to the same account as your card, meaning that it acts to effectively increase your credit limit.

Other card issuers will debit the cash straight to your current account. Whether this is done monthly or annually will, again, depend on the card issuer.

Sometimes you’ll be able to exchange your cash back amount for vouchers to spend at particular shops. As an incentive to take this option, the vouchers you receive will be worth slightly more than the cash you’d get otherwise.

Cash back cards and annual fees

Cash back credit cards tend to come with relatively high APRs, and so if you want to take one out, it’s important that you have a good think about whether or not you can afford it.

If you don’t think you’ll be able to pay enough off each month to keep the interest at bay, then the likelihood is that the interest you pay will outweigh the cash back you earn and you might be better off with a more conventional credit card.

As well as this, cash back credit cards usually come with pretty high annual fees, since they are primarily aimed at those with a large annual income.

If you hunt around, you can find cash back credit cards that come with no annual fee whatsoever. Generally these cards will offer cash back at a lower rate, however given the savings made on the annual costs; you are generally still getting a better deal.

Where can I use my cash back card?

You can use your cash back card just as you would any other credit card. You should just take note of your payment processing company (i.e. Visa, MasterCard, American Express, etc) and whether or not cards issued by that company are accepted where you want to spend your money.

This is usually only an issue with American Express cards. Given the slightly higher handling fees on the part of businesses, you will find that American Express cards are accepted less universally than, say, cards processed by MasterCard.

Other rewards based cards

As well as cards that offer cash back on purchases, there are other credit cards available offering perks and rewards such as points that can be redeemed on flights.

These cards work in much the same way as cash back cards, earning you points for every pound you spend on them. When you build up enough points you can then exchange them for airline tickets or upgrades to first class on existing tickets.

To find the best rewards based cards, whether cash back or flight points, head over to our credit card comparison page. We’ll show you a list of the best cards available in each category so that you can be sure that you’re getting the best interest rates and rewards plans on the market.