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Cashback credit cards

There’s a huge range of credit cards out there – many trying to tempt you with rewards, and cashback is just one of those. Here’s what you need to know about cashback credit cards.

Frequently asked questions

What is a cashback credit card?

A cashback credit card is a type of reward credit card that earns ‘cash’ each time you make a purchase. Your cashback is typically paid on a monthly or yearly basis and the amount you get depends on factors, including how much you’ve spent and whether or not you’ve met the pre-agreed minimum spend on the card.

How do cashback cards work?

As you spend money on your credit card, you’ll accumulate a cash reward. How this is paid as cashback will depend on the terms set out by your credit card provider. Often, it’s taken off the balance of your credit card account after a set period of time, say, annually. Or, money could be paid directly into your bank account. Some providers will even give you the option of turning your cashback into a charitable donation.  

There may be a cap on how much cashback you can get, so make sure you check the terms and conditions carefully. Like other types of credit card, there’ll be a limit to how much you can spend on a cashback card. If you go over that limit, you’ll be charged and this could affect your credit rating.

Rewards-based credit card products, such as cashback, only work for you if you can generally pay off the card in full each month. That’s because any money you could get in cashback is likely to be exceeded by the interest you’ll be charged by not meeting the repayment.

What should I look out for in a cashback credit card?

Some cashback credit cards include a monthly or annual fee, so make sure you check the terms carefully. Then work out whether you’ll spend enough on the card to make it worth paying that fee.  

Before you choose a credit card offering cashback, it’s important you check and understand the APR, or annual percentage rate. APR is the official rate used to let you know the cost of borrowing money over a year. The percentage you see offered includes the cost of borrowing and any related fees that are automatically included, such as a monthly or annual fee.

Learn more about why the APR rate you’re offered on any credit card is so important to understand. You should bear in mind that the interest rate advertised – the ‘representative example’ – won’t always be the one that you’ll get. For example, the deal you’ll be offered will also depend on your credit rating. 

Is this type of card right for me?

Cashback cards won’t be for everyone. For example, they might not have the most competitive interest rates. Whether or not they will work for you depends on your individual circumstance, including your spending habits. You might want to make sure that the credit card you choose actually gives you cashback in places where you’ll shop.

It’s all too tempting to go for a cashback card purely because you think you’re getting something for nothing, but it’s important to look at the bigger picture. See what else the card has to offer – such as  0% interest on balance transfers,  or new purchases – which could be handy if you know you’d like to spread the cost of more expensive items over a longer period of time.

Where can I compare cashback credit cards?

It can take just a minute to start a comparison and see deals on a range of cashback credit cards.

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