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A cashback credit card rewards you for everyday spending by giving you a small percentage back on your purchases.
It can be a simple way to earn a little extra from your spending, but cashback cards generally only leave you better off if you clear your entire balance each month.
Use your cashback credit card for everyday purchases, such as groceries, fuel or travel
You’ll get a percentage of your spending back. Some cards offer a flat cashback rate, while others pay more with certain retailers or during introductory periods
Cashback is usually paid monthly or yearly, depending on the card provider
To make the most of a cashback card, aim to clear your balance every month. Otherwise, interest charges could outweigh the cashback you earn
Bear in mind...
Look out for cashback caps, minimum spend requirements and any card fees, as these can affect how much you could earn.
Earn on everyday spending
Rewards can build up over time
Some cards offer bonus rates or intro offers.
Interest charges can wipe out rewards if you don’t pay off your balance in full
Some cards come with monthly or annual fees
Cashback may be capped or need a minimum spend.
Below is a breakdown of the main differences between cashback and rewards cards:
Rewards credit cards | Cashback credit cards | |
|---|---|---|
How rewards work | Earn points, vouchers or air miles and use them for travel, dining, or retail perks. | Get a percentage of your spending back as cash, credited to your card or bank account. |
Typical value | Can be more generous than cashback, especially for frequent travellers or big spenders. | Usually offers smaller returns. |
Ideal for | Those who are happy with brand-specific rewards for a potentially higher rate of return. | Those who want simple, flexible rewards without brand tie-ins. |
Reward flexibility | May be tied to specific brands, airlines or retailers. Check where and how you can redeem your points. | If cashback is paid to your bank account, you can spend it however you choose. But sometimes it's just loaded onto your credit card. |
Spending requirements | Often include minimum spend thresholds for earning points or unlocking introductory bonuses. | Some cards have a minimum spend to start earning cashback; caps may also apply. |
Fees & APR | Fees are common and interest rates generally high – so these cards only work if you pay your balance in full each month. | Some cashback cards charge fees and again, interest rates are high – so only apply if you can repay in full each month. |
The amount of cashback you earn depends on three main things:
How much you spend
The cashback rate offered by the card
Any limits, exclusions or cashback caps set by the provider
You can usually get cashback of between 0.25% and 5% on eligible spending. So if you buy groceries, fuel and other bills on your card, it could earn you a healthy sum of money each year.
The table below gives examples of how much cashback you could earn over a year at different cashback rates.
Annual eligible spending | 0.25% cashback | 0.5% cashback | 1% cashback |
|---|---|---|---|
£5,000 | £12.50 | £25 | £50 |
£10,000 | £25 | £50 | £100 |
£20,000 | £50 | £100 | £200 |
£30,000 | £75 | £150 | £300 |
Bear in mind...
Higher cashback rates tend to be introductory offers only.
After the bonus period ends, rates usually drop to between 0.25% and 1%.
When you’re comparing cashback credit cards, look out for:
Check if you’ll need to spend a minimum amount before you start earning rewards
Cards may pay different rates depending on what you’re buying or exclude certain transactions from earning cashback
Some cards offer boosted cashback only for a limited time
See if there’s a monthly or annual fee and whether it’s worth paying for the rewards on offer
This is the annual percentage rate, which represents how much it could cost you to use the card over the course of a year. The APR you're offered depends on your credit history and might not be the rate advertised
Quick tip
Setting up a direct debit to clear your balance every month can help you stay on top of your credit card debt.
Get more tips in our guide to paying off your credit card debt.
Usually pay off your balance in full each month
Use your card regularly for everyday spending
Want a simple reward that's easy to understand
Don't want to keep track of points or vouchers
Often carry a balance from month to month
Need a long interest-free period for purchases
Are focused on paying down existing credit card debt
Could be tempted to spend more just to earn rewards
Cashback and reward cards won’t be for everyone. Here are some alternatives that might suit you better:
0% balance transfer credit cards are the most popular type of credit card on Compare the Market, with over 36% of our credit card customers choosing them2.
They let you transfer existing credit card debt to a new card, usually for a fee of 2%–4% of the balance, and pay 0% interest for a set period.
0% purchase credit cards are another popular choice, with 23% applying for them2.
With these, you can spread the cost of spending over a set period, interest-free (handy for big-ticket items).
Credit builder credit cards are designed for those with a low credit score or no credit history. If used responsibly, they can help you build your credit score over time.
Around 11% of credit card applicants choose credit builder cards on Compare the Market2.
See how credit cards work, and understand the different types so you can decide which will be best for you
The annual percentage rate (APR) of cashback credit cards isn’t the same across the board – it depends on the provider. But in general, cashback credit cards usually come with higher APRs than standard credit cards.
If you need to borrow rather than focus on rewards, you may be better off with a different type of credit card.
Yes, you can withdraw cash with a cashback card, but it’s not usually a great idea to take out money from an ATM with any type of credit card as:
The fees are very high, and
It will leave a mark on your credit report and can be viewed negatively by lenders.
Yes, it’s possible to find cashback credit cards that have no monthly or annual fees. But the trade-off is that cards charging annual fees can have higher cashback rates.
It’s worth comparing a few options and looking at your spending habits to decide if it’s right for you.
Yes, all credit cards can help you build credit if you use them responsibly. But there’s a catch with cashback credit cards – they usually come with higher interest rates.
So, if you’re not fully clearing your balance each month, interest can add up fast.
It may be difficult to get a cashback credit card if you have a low credit score. Our free eligibility checker lets you see which (if any) cashback cards you’re most likely to be offered without damaging your credit score.
No, you’ll usually only earn cashback on the money you spend on your card.
Charlie is a senior commercial leader with close to a decade of experience across the UK’s leading personal-finance and comparison platforms. Before joining Compare the Market as Head of Commercial in 2024, he held senior commercial roles at TotallyMoney and MoneySuperMarket Group.
1 Based on the % of respondents familiar with Compare the Market reporting they love the brand in the last 12 months vs. other leading PCWs. Source: Savanta BrandVue Financial Services, National Representative Survey of 9,772 respondents (June 2026)
2 Correct as of June 2026.
What our expert says...
“If used wisely, cashback credit cards can yield great rewards. But it’s important to find the right deal for your spending habits or you could end up paying more in interest than you earn as cashback.”