Cash Back Credit Cards | March 10

Cash Back Best Buy Guide Read more in... Part 1: How Do Cash Back Credit Cards Work? Part 3: Using a Cash Back Credit Card Cash Back Credit Card Questions Got a Credit Card Question? Send your question to and we'll set our team of credit card experts to it! Most recent questions: How does a tiered cash back scheme work? Which is the highest paying cash back credit card? When and how will I receive the cash back I've earned? Why is it important to repay my spending in full when earning cash back? More frequently asked questions »

Part 2: How To Compare Cash Back Credit Cards

IF you're ready to earn cash rewards with a cash back credit card then the only thing left to decide is which provider's deals will best fit in with your spending habits.

We've compiled a list of things to look out for when you compare cash back credit cards.

Good if...

• You don't want to borrow money long-term
  Cash back credit cards aren't suitable if you're looking to borrow money over a few months: the interest that you'll pay will far dwarf any money you can make from your credit card provider.



• You're willing to do most of your spending on your credit card
  To get the most from a cash back credit card you'll need to be using it to spend a significant amount and be able to pay it off.



• The deal matches your spending
  When you can get good rates of credit card cashback at a retailer where you often shop in any case, you'll stand to make the most from a cashback credit card. Many different types of retailers take part in cashback schemes so it's worth comparing cash back credit cards from time to time to see if there's one that matches your spending.



• You have a good credit history
  Cash back credit cards will typically only be open to those with an excellent credit history. Make sure that you have a good history of responsible borrowing in the UK and meet all of the credit card provider's criteria before you apply as being turned down could have a negative effect on your credit score.

Bad if...

• You have an outstanding credit card debt
  Paying interest on any credit card is likely to be much more expensive than anything you'll make with a cash back credit card.



• You have a poor credit history
  Not only are you are unlikely to be accepted for a cash back credit card with a poor credit history but the high rates of interest on these credit cards mean that. You can compare bad credit rating credit cards instead which will help you to rebuild and stregthen a poor credit history.

How to compare

As relatively simple and as straightforward as cash back is, cash back credit cards do vary and this guide aims to help when comparing and choosing a cash back credit card. Read on for more details on how to compare cash back credit cards...

What to look for...

• How much cash back is awarded and on what purchases?
  Cash back credit cards each offer a different cash back reward scheme, which is determined by the issuing bank or building society.
  
  There are 3 ways of classifying the main types of cash back scheme; flat rate, tiered and selected retailers.
  
  Flat rate and tiered cash back schemes usually allow you to earn cash back on all your purchases - with no restrictions on which purchases will or won't earn you cash back.
  
  Flat rate cash back schemes will offer a set percentage of cash back on your spending, whereas tiered schemes offer more or less cash back when your spending reaches certain thresholds.
  
  Selected retailer cash back credit cards will usually offer much greater amounts of cash back, but only when you spend at certain retailers or companies as specified by the credit card issuer.



• How much will you earn on your spending?
  Picking the cash back credit card offering the highest quoted cash back percentage is not always going to be the card you'll make the most money from.
  
  Choosing the right cash back credit card is vital if you want to maximise your cash back earnings.
  
  Luckily, we've already made a cash back credit card reward calculator tool for you to use, which will allow you to enter in your average monthly credit card spend and we'll let you know straight away how much money you'll earn from each cash back credit card.
  
  Unfortunately, our tool can't take into account cash back earned at selected retailers, so you'll have to weigh the pros and cons of these cards yourself - if you're a fairly low credit card spender but you do shop at the selected retailers of a particular cash back credit card - then the card may be a good choice for you.



• Introductory cash back bonuses
  Certain cash back credit cards offer introductory bonuses when you first become a cardholder. These bonuses are usually increased cash back earnings during an introductory period. The American Express Platinum credit card (up to 5%) currently offers increased cash back earnings during the first few months of account opening.



• Introductory rate offers
  Some cash back credit cards may offer introductory rate deals when you first become a cardholder.
  
  The introductory rate offers to be looking out for when choosing a cash back credit card are interest rate deals on purchases, e.g. "0% on purchases".
  
  A 0% purchase deal may not be a primary deciding factor, but it could offer a great way to buy a large purchase now, earn some cash back on it, and then pay it back a little more slowly over the coming months - without incurring interest charges and keeping your cash back as a free reward.



• The standard interest rate
  Credit card companies are required by law to quote their credit card's APR in all advertising material - so it stands to reason that it must be an important factor to consider even when comparing cash back credit cards.
  
  If you've read this guide to cash back credit cards from the beginning, you'll already know how important it is to always repay your spending in full each month to really enjoy the money-saving benefits of earning cash back.
  
  When you always clear your credit card balance in full you aren't charged any interest on your purchases - so knowing how much the interest rate is may not seem all that important.
  
  It is however, a good cost comparison and also good to know for months where you don't quite manage to clear your balance in full.

What to watch out for...

• Cash back ceilings
  Some, though not all, cash back credit cards have a maximum limit on the amount of cash back you can earn. Usually this is noted as a capped amount of cash back per year, or a capped amount of spending that cash back can be earned on per year.
  
  If a cash back credit card does have a ceiling on earnings, if you reach this limit you won’t earn any more cash back for the remainder of that year, but you will begin to earn cash back again in the new year.
  
  Cash back ceilings are quite high, so unless you're spending a very large amount on a cash back credit card each year they shouldn't affect your earnings. However, if you do want an uncapped cash back credit card, the American Express Platinum credit card (though the introductory 5% period is limited to spending up to £2,000) does not have limits on its cash back offer.



• Annual fees
  Annual fees are rarely found on credit cards, however when they do turn up it's usually on a reward credit card.
  
  An annual fee is like an account management fee, charged yearly just for holding the account. It is a real added expense that should be considered.
  
  However, currently none of our listed cash back credit cards charge an annual fee.



• Transferring a balance
  If you have an outstanding balance on a current credit card try not to be lured into moving it to a cash back credit card.
  
  Most credit cards will only allow you to repay your cheapest balances first, so by moving a balance to a 0% deal on a cash back credit card, if you also spend on the card (to earn cash back) your purchase balance will effectively become trapped behind your cheaper balance transfer and will accrue charges in interest until you've first fully repaid your balance transfer.
  
  If you do want to transfer a balance and benefit from a cash back credit card - get two cards, a 0% balance transfer credit card for your current card debt and a cash back credit card for new purchases.

Don't forget!.

• What you can and what you can't earn cash back on
  Cash back can only ever be earned on card purchases - that is buying goods or services from retailers or companies. Some cash back credit cards may also specify which retailers you can earn cash back with.
  
  Cash back can never be earned on cash withdrawals, buying foreign currency or traveller's cheques, gambling transactions or balance transfers.
  
  If you need to access cash, it's always advisable to use your debit card if you can.



• To not lose your cash back
  As long as you always make your cash back credit card payments on time and you don't go over your credit limit the cash back you've earned will stay safe and accrue until it is paid out, usually each year.
  
  However, most cash back credit cards stipulate that they will not pay out cash back earned in a month that you go over your credit limit or if you fail to make the payment on time.
  
  So be careful, and keep an eye on when you need to make your monthly credit card payment (or set it up as direct debit) and remember not to go over your credit limit.

For more on how credit cards work go to how cash back credit cards work - to find out how to apply for, use and lose cash back credit cards see our how to use a cash back credit card section.

Cash back credit cards