He was recently looking to buy a £150 million pound jumbo jet and he is meant to be worth a few quid. However billionaire Chelsea owner Roman Abramovich suffered the embarrassing fate of the typical credit card user when his was declined in a Chelsea store.
The Russian, listed second in the World Rich List, was only trying to buy a lamp but it appears his supposedly ample credit couldn’t take the strain.
Perhaps when making similar purchases in future the oligarch might consider using cash instead; particularly given the re-emergence of cashback offers from credit card providers.
However, if Roman does splash out on the jumbo jet and uses the best cashback credit card he could land a cheque for seven and a half million. That ought to be enough for a few lamps.
MoneyExpert.com outlines what to look for when choosing a cashback credit card…
Cashback is the most recent ploy of credit card companies battling for customer loyalty, with one in ten cards now offering schemes. It works by paying out a set percentage based on how much you spend on your credit card in a year. If you spend £1,000 and earn five per cent cashback you get £50.
So far so simple. But of course it’s not so simple. There are strings attached and they can tie you up in knots.
There are some good deals out there but they tend to have strings tightly attached. Abbey has launched a cashback credit card that pays a market-leading rate of five per cent, but this only applies to the first £1,000 on purchases made in the major supermarkets. And the payout is limited to £50 until the end of January 2008.
A number of other cards, such as Capital One and American Express offer good deals but again they tend to come with catches.
Many with headline grabbing rates will only last for a couple of months and then you may be left with a card that’s uncompetitive in terms of purchase APRs and balance transfer fees.
The American Express three per cent deal lasts for three months before falling to rates between 0.5% and 1.5% depending on how much you spend.
Play the card game
It may seem obvious to look for the best rate, but when cards have other offers and tag on a cashback reward as well it can be tempting to plump for them.
However, some cards offer rates so low that any cashback you get would be wiped out by the interest you pay.
What does cashback offer
The average level of cashback paid to customers is just 0.72% and that drops to 0.5% when you remove the highest paying card from the average.
That means someone spending £2,000 on their credit card in a year can expect to earn just £14.40 in cashback. Not exactly a sum to go wild for.
Look at the bigger picture
Cashback can sound attractive but there are plenty of other offers attached to cards that can serve you better in the long run.
A number of cards now offer travel insurance, air miles, or incentives on shopping, and given the fairly feeble cashback rates with some cards these can tend to be a better deal.
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