How to make money from your Christmas spending
The cashback credit cards would simply give you 'cash back' every time you spend on them. For example, the Santander 123 Cashback credit card pays 3% cashback on fuel spending (capped at £300 per month), 2% cashback on purchases at major department stores and 1% on supermarket spending.
Or there is the American Express Platinum Cashback credit card, which pays 2.5% cashback for the first three months on all purchases up to a maximum of £100 – perfect for festive spending. After that the cashback rate falls to 1.25%, which is still pretty good.
Another option is to go for a reward credit card rather than a cashback card.
These will give you points when you use it that you can then spend in certain stores. For example, the Tesco credit card gives you one point to spend in-store for every £4 spent, and the NatWest YourPoints World MasterCard rewards you with one point for every £1 spent, to redeem at a range of retailers, such as Boots, Amazon and Marks & Spencer.
With any credit card it's important you can pay off the balance, otherwise you'll be stung with hefty interest payments. If you're planning to do a lot of shopping online, cashback websites such as quidco and topcashback.co.uk will pay you for your spending.
You can earn around 5% for each purchase and the money will be returned to you between one and three months later.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Rather than shopping online directly with a retailer, if you go to the retailer via a cashback website (you have to register as a member), when you make a purchase the cashback site gets a commission and rebates some – or all – of this back to you. The cash being paid back to you will vary wildly from site to site and even from product to product, so check you’re getting the best deal before you buy.
Cashback credit cards
These reward you with a small percentage of cash back on your total spend on the card, either each month or annually. Cashback cards carry high APRs and ONLY work if you pay your balance off in full every month. If you miss payments and have existing credit card debts, leave these well alone.