The best credit cards for rewards and cashback
Choosing the right card can be a difficult task so Moneywise has sifted through the plastic to find the very best credit cards that reward you for your spending.
If you are going to spend large amounts and don't plan to clear the balance each month, any rewards will quickly be undone by interest payments. Instead, a credit card offering 0% on purchases would be better, ideally one offering a long introductory 0% period, which reverts to a reasonable rate of annual interest thereafter.
If you already have credit card debt, you might want to find the best credit card for balance transfer deals - preferably one charging 0% on balance transfers. But don't forget to look out for the fees too. Read our guide to the top 0% deals here.
Here's our line-up of the best credit cards for rewards and cashback.
Unlike most financial products, reward cards often offer preferential rates at specific retailers, so the card that's best for you will depend on where you usually shop.
For ease of comparison, we ignore the value of any points you'd have earned using regular loyalty schemes like Clubcard or Nectar, focusing just on the points you get from these cards.
The John Lewis Partnership Card offers the equivalent of a 1% reward on spending in store and 0.5% reward on spending elsewhere, meaning you’ll get £22.50 a year if you spend £3,000 - that's £1,500 in John Lewis or Waitrose, and £1,500 elsewhere. The card’s standard interest rate is 16.9% APR, and there's an introductory 0% purchases and balance transfer offer for six months.
Tesco Bank's Clubcard Credit Card gives five points for every £4 you spend in Tesco (a point is worth a penny), and one point for every £8 you spend elsewhere. If you spend £3,000 a year, half in Tesco stores and half elsewhere, you’ll earn rewards worth £20.63. Interest is charged at 18.9% APR representative.
Sainsbury's Bank's card users earn two points for every £1 spent in Sainsbury's and one point for every £5 spent elsewhere. If you spend £3,000 a year on your card, half in Sainsbury's, then you'll earn £16.50 with Sainsbury's Bank (500 points = £2.50). You can also currently get 5,000 bonus points if you spend £800 in the first three months.
You could get slightly more with Amex's Nectar Card. It pays up to four points for every £1 spent at Sainsbury's (plus other Nectar partners, including Argos, Homebase and EasyJet) and rewards two points for every £1 spent at non-Nectar retailers. In year one, you'd get up to £45 if you spend £3,000, but for the second year onwards you'll need to factor in the £25 annual fee, which is waived for the first year. The representative APR is 25% including the fee.
Amex will also give you £100 worth of Nectar points as a bonus if you spend £2,000 within three months of getting the card.
The AA FuelSave card pays 2% cashback on fuel, rising to 4% if you spend more than £500 a month. You'll also get 0.5% cashback on other spending. However, there's a £3.50 monthly fee, so you've got to spend at least £175 a month on fuel for the cashback to offset the fees. For heavy drivers, it could be well worth it though. The APR representative is 22.4%, but that's inclusive of fees.
The cashback deal on American Express's Platinum Cashback Card has been slashed, but it's still one of the better deals out there. There's an introductory offer of 5% cashback on spending up to £2,500 over the first three months. After that, cardholders will earn 1% cashback on spending up to £10,000 and 1.25% on any further spending. There's a £25 annual fee. If you spend £3,000 over the course of a year you'll earn £35 after fees are deducted. The APR representative is 28.2% including the fee. You’ll need to bear in mind that American Express is less widely accepted than Visa or MasterCard.
The Asda Credit Card pays 1% cashback on Asda shopping, including fuel and clothes from George.com, and spending elsewhere earns 0.5% cashback. There's 5% cashback on any insurance policy bought on the card, too. The representative APR is 18.9%. Asda also has premium version of this card that costs £3 a month but pays double cashback. It works out as better value than the fee-free version if you spend more than £300 a month in Asda.
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.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.