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.
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.
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.
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.
If you shop in Sainsbury’s then the Nectar Purchase Credit Card will give you 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 £13.50 with Sainsbury's Bank (500 points = £2.50).
The American Express's Platinum Cashback Everyday Card has an introductory offer of 5% cashback on spending up to £100 for the first three months. After that, cardholders will earn 1% cashback on spending over £5,001 and 0.5% if you spend below this amount. The APR representative is 22.9% including the fee. You’ll need to bear in mind that American Express is less widely accepted than Visa or MasterCard.
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. The card fee will cost you £3.50 per month, so you’ll need 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.
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%.