How do Cash Back Credit Cards work?
Cash back credit cards give rewards every time you spend on the card and are typically credited to your monthly statement. Rewards can take the form of tax-free cash as well as other cash-based incentives such as store credit, air miles and extra points on supermarket rewards card.
How to make the most of a cash back credit card
It is also important to consider the length of time the cash back rate is applicable for. Credit card companies use cash back to encourage people to spend more using their card in order to earn commission paid by merchant. A standard rate of cash back is around 5% for the first 3 months but this may decrease to 3% or 1% thereafter.
Furthermore, the more you spend, the more cash back you can earn. If a typical rate of cash back is 1%, you may be eligible to earn more than this once you reach £3,000 in spend.
Some banks will reward certain spending more then others. For instance, a single card may offer a higher rate of cash back for spending on fuel then leisure.
Customers must consider whether they would prefer a Visa/Mastercard or an Amex Card. Not all retailers accept Amex cards so it is important to check whether this affects you.
The advantages of credit cards where you earn cash back
The biggest advantage of cash back credit cards is the rewards it offers card users. Cardholders can receive hundreds of pounds worth of benefits varying for tax-free cash, store vouchers and club card points. In order to maximize the amount of cash back possible, consumers can use their cards for big purchases such as grocery shopping, home improvements and holidays. Customers are warned not to spend irresponsibly because a cash back credit card is still a credit card and balances must be cleared each month.
Moreover, you can expect to receive the same benefits of a typical credit from a cash back credit card. For example, cash back credit cards provide extra protection offered to consumers by section 75 of the Consumer Credit Act. This refers to purchasing something from a company and receiving a full refund if the item is lost, stolen or the company goes into liquidation.
The drawbacks of credit cards where you earn
One key disadvantage of a cash back credit cards is that it is very likely that the APR the card offers will be higher then cards that do not have the cash back incentive. This means that a cash back credit card is not suitable for those who do not expect to clear their balance in full each month since it is more then likely that the interest that has to be paid on remaining debt will be larger then any cash back. An interest free or a low interest card may be a better option for these groups.
Another important consideration to bear in mind is the time period that the terms of the cash back credit applies for. Cash back is used as an incentive to encourage cardholders to spend using their card. As a result there may be a more attractive rate of cash back as well as the APR on outstanding debt for an introductory period only.
There are many different types of cash back credit cards and some cards offer more cash back then others. However, not everyone is eligible for credit cards that offer higher rates of cash back. There are cash back cards that offer lower cash back rates, specifically designed for those with poor credit history.
Finally, if the balance is not paid every month it is more than likely that the extra interest charged on the remaining debt will outweigh the benefits gained by the cash back. As a result, it is advisable to set up a direct debit to ensure that debt is paid in full every month.
Apply for a cashback credit card
At Quiddi Compare, we work with list some of the top credit cards where you earn cash back in the UK. You can compare the different offers and rewards using our comparison table above. Once you have selected the best cashback credit card for you, simply click on the ‘visit website’ button which will direct you to the company’s website where you can fill in an application. Our service is completely free to use and we will not pass on your details to any other companies without your consent.
In conclusion, cash back credit cards offer those who pay their balances in full every month a great deal of benefits. There are many options that should be considered when applying for a cash back credit card. At Quiddi Compare, you can be confident that we are always looking for new partners to find the best deals for our customers.