Cashback credit cards
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Compare cashback credit cards
There’s a huge range of credit cards out there, many of which come with rewards – and cashback is just one of those. Every time you use your card, you’ll get back a ‘cash’ percentage of what you spend. So, for example, if your credit card gives you 1% cashback and you spend £200, you’ll get £2 back.
While it’s an attractive incentive, cashback cards tend to have higher interest rates. Unless you can be sure to pay off your credit card in full every month, it might not be the right borrowing option.
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How do cashback cards work?
As you spend money on your credit card, you’ll accumulate a cash reward. The ideal scenario is that you use cashback cards to pay for your everyday spending, instead of a debit card or cash, and pay back everything you owe each month. That way you benefit from the cashback without paying interest.
Different providers may offer different ways of giving cashback. For example, you might get:
- a simple flat rate, or a tiered rate: the more you spend, the higher the level of cashback
- a high introductory rate or bonus cashback for a limited period
- higher cashback rates for shopping with certain retailers
- extra cashback for things like fuel.
The cash you get is typically paid monthly or yearly. How it’s paid will again depend on the provider. Options might include:
- automatically adding it to your credit card balance, directly reducing the amount you owe
- transferring it to your current account
- converting it into reward points that can be redeemed once you reach a certain amount
- converting it into a charitable donation.
With some rewards cards, you might only receive cashback once you’ve met the pre-agreed minimum spend on the card. Or there may be a cap on how much cashback you can get, so make sure you check the terms and conditions carefully.
Rewards-based credit cards, like cashback, only work for you if you can pay off the card in full each month. Otherwise, the cash you get back will be eaten up by the interest charged on the remaining balance. Like other types of credit card, there’ll also be a credit limit – you’ll be charged if you go over it and this could affect your credit rating.
Likewise, cashback cards are only worth it if you get back more in cashback than you pay in fees. Some providers charge hundreds of pounds in fees per year on their most exclusive cards. Other providers charge up to £15 a month, so you need to consider if this kind of card makes financial sense for you before applying.
How much cashback can I get?
That depends on the individual card and the provider, but it’s usually around 1% to 5%. If you use it every time you do a supermarket shop, fill up on fuel and pay a bill, it could potentially give you back hundreds of pounds every year.
Just be aware that most cards have a yearly cap on how much you can get back, while others will expect you to spend an annual minimum of several thousand pounds before you can receive anything at all.
How can I find the right cashback card for me?
It’s worth comparing what different cashback credit cards offer to find the right deal for you. Check out:
- Any introductory offers and how long they last.
- Whether there’s a monthly or annual fee.
- The APR - the interest you’ll pay can depend on your credit history. You might not get the advertised rate.
- Whether you need to spend a minimum amount before you can start getting cashback.
Make sure you check the terms and conditions carefully before applying. You’ll need to work out if the cash you’ll get back makes up for any associated fees. You don’t want to rack up a huge credit card bill for the sake of receiving a bit of extra cash. Remember, if you can’t pay back what you owe in full each month, the interest will start to build and you could end up in debt.
What are the alternatives to cashback credit cards?
Cashback cards won’t be for everyone. For example, they might not have the most competitive interest rates. Whether they’ll work for you depends on your individual circumstances, including your spending habits.
If you struggle to pay back the full balance each month or have a bad credit score, there are alternatives that might suit you better:
- 0% purchase credit cards Allow you to buy items upfront then pay off the amount you owe, interest free, over a set period of time.
- 0% balance transfer credit cards Move your existing credit card debt to one card and pay 0% interest for a set period of time.
- Credit builder credit cards Specifically designed for people with a low credit score or no credit history. Credit limits are much lower, but used sensibly and making repayments on time could help you gradually build up your credit score.
- Travel credit cards Can offer better exchange rates and low or even no fees when used abroad. Some travel credit cards also give you cashback on foreign purchases, so you get the best of both worlds.
Where can I compare cashback credit cards?
You can use our eligibility checker to see what cashback credit cards you’re most likely to be accepted for, without affecting your credit score. All you have to do is enter a few details.
If you'd prefer to browse our list of credit cards before checking your eligibility, find out which credit cards we compare.
Compare the Marked Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and availability.
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[1] As of July 1st 2024, Compare the Market had an average rating of 4.8 out of 5 from 43,115 people who left a review on Trustpilot. The score 4.8 corresponds to the Star Label ‘Excellent’.
[2] Correct as of June 2024.
Get a quoteFrequently asked questions
What are cashback rates?
Cashback rates are the percentage rate at which you get cash back on the money you spend. Different credit card providers offer different cashback rates. For example:
- Some offer a flat rate, while others offer a tiered system that gives you a higher rate once you spend over a specified threshold.
- Some offer an enticing introductory rate for a limited period – a good option if you need to make a one-off large purchase
- Some pay different rates for different purchases, for example, extra cashback on fuel or shopping at participating stores.
For that reason, it’s worth comparing what’s out there to see what cashback credit card might work for you.
How are cashback rates calculated?
Cashback rates are calculated as a percentage of the amount you spend on your credit card, usually rounded up to the nearest pound or penny.
Let’s take an example of a flat rate offer at 1.5%:
You spend £500 a month
Your cashback rate is 1.5%
You’ll get £7.50 in cashback
If you have a tiered rate, you might receive 1% on spends up to £1,000, then 2% on any spends after that.
Just be aware that some cards have a limit to how much cashback you can get in total, while those advertising ‘unlimited’ cashback generally offer lower cashback rates.
What APR do cashback cards have?
The annual percentage rate (APR) of cashback credit cards varies depending on the provider. But in general, the APR for cashback credit cards tends to be higher than for standard credit cards. If you need to borrow money, you may be better off with a different type of credit card.
What’s the difference between a cashback card and a rewards card?
With a cashback card you’ll actually get cash. Rewards cards offer other benefits like air miles and store loyalty points. Some rewards cards even let you convert your points into vouchers for theme park entry, restaurants or holidays.
Which is the better option, points or cashback?
Rewards cards are typically more generous and offer better rates than cashback. If you enjoy eating out, family holidays and days away, the right rewards card could offer great value. That said, they tend to tie you into spending with certain brands or stores. Cashback may offer less value, but you can spend the money you receive on whatever you want.
Can I withdraw cash with a cashback card?
Yes, you can, but we strongly advise you to avoid withdrawing cash from an ATM with any type of credit card. The fees are ‘eye-wateringly’ high and will definitely cost more than any cashback you might get on the withdrawal.
Can I get a cashback credit card with no fees?
Yes, it’s possible to find cashback credit cards that have no monthly or annual fees. But you may find that cards charging annual fees have higher cashback rates. It’s worth comparing a few different options while keeping in mind your spending habits, to see what might be the right option for you.
Can I build credit with a cashback credit card?
Yes, all credit cards can help you build credit if you use them wisely. But it’s important to be careful because when it comes to paying back cashback credit cards, they typically have higher interest rates.
Can you get a cashback card with bad credit?
It may be difficult to get a cashback credit card if you have a low credit score. Our free eligibility checker lets you see what cashback cards you’re most likely to be accepted for, without damaging your credit score.
Will I get cashback on interest and balance transfers?
No, you won’t receive any cashback on interest or balance transfers, just on the money you spend on your card.
Are cashback credit card rewards taxable?
Normally, no. Credit card rewards are usually classed as a rebate by HMRC and so aren’t taxable, but there’s a couple of exceptions. If you receive a reward without having to spend any money, this would be classed as taxable income. You’re more likely to run into tax issues if you have a business credit card. That’s because you won’t be able to deduct any money you receive as cashback, as part of your business expenses.
What our expert says...
“If used wisely, cashback credit cards can reap great rewards, potentially earning you cash back on your everyday spending. But it’s important to find the right deal for your spending habits.”
- The Editorial Team, Experts in personal finance, insurance and utilities
