Earn cash back on everyday spending
Compare cards from trusted UK providers
Find the right credit card for you with MoneyExpert
There is a risk of incurring charges if you run over your limit or are unable to cover the balance of your card at the end of the month. Such charges will likely be greater than any saving you would make by using the card, and therefore it is advisable that you only use a cash back card if you are very confident that you will be able to afford your monthly payments.
Some cash back credit cards can have high interest rates which can outweigh the benefit of having a cash reward. For example, if you're getting 5% cash back on your purchases but at the same time are paying 20% in interest payments then you are not getting a good deal. As long as you avoid carrying a balance from month to month, you'll avoid interest charges altogether.
Keep in mind that the 0% interest rate may not align with your normal repayment date and therefore you may end up making an interest payment on the final month of the 0% interest deal. The interest rates on purchase cards can be high once the introductory period ends, so it is important to avoid letting the introductory period expire while you still have debt on your purchase card.
Also, it is recommended that you set up a direct debit to make managing the repayment of your credit card debt easier and to make sure that you do not miss the minimum payments and incur a penalty for doing so. You may receive penalty charges for missing payments, being late on payments or by exceeding your spending limit, so this is something to be careful of.
Cash rewards can also make the idea of spending money to earn cash back attractive, when in reality you would be saving more money if you simply reduced your spending. This is especially true when different cards have different rates and with some cards the more you spend the higher the cashback percentage you will receive.
Some cash back credit cards also have an annual fee associated with them that can cost anywhere from £25 to £100. The annual fee will shave off a certain amount of the money you get as a cash back, but depending on the cash back rate you're getting, the card might still be saving you a significant amount of money each year. For this reason you shouldn't avoid using a card altogether just because they have an annual fee.
You are looking to make big purchases on items such as cars, furniture and holidays. This will enable you to make significant savings through high cashback percentages.
You are very confident that you will not have a problem in clearing your monthly balance in full, and therefore avoid having to pay high interest rates.
You are disciplined and will be able to resist any urge to overspend in order to attain cash back rewards.
You are not looking to spend any more money but currently possess some debt that you want cleared. In this case you could look at using a 0% interest transfer credit card.
You are hoping to be able to borrow money for some purchases and want to be able to pay back the debt over an extended period while paying low interest rates. In this case you are better off with a low interest rate credit card.
You find it difficult to avoid spending when there are benefits attached to making purchases.
If you feel unsure of whether or not a cash back credit card would be right for you, or you are unsure of which other credit would be best suited to your current situation then contact us for free specialist advice on what the best options are for you. We understand that looking for the best deal can be daunting with the number of different credit cards there are on offer, and which is why we're here to help.
