How to Compare Cash Back Credit Cards: part 2

Cash Back Credit Card Best Buys Cash Back Credit Card FAQ's Have a question? Send in your question and we'll do all we can to help answer it. Where appropriate user questions will be added to the FAQ's for future use. Most recent questions: Q. How does a tiered cash back scheme work? Q. Which is the highest paying cash back credit card? Q. When and how will I receive the cash back I've earned? Q. Why is it important to repay my spending in full when earning cash back? More frequently asked questions »

Cash back credit cards are the wallet filler every conscientious credit card user should have. Offering up rewards on your spending that can be used by anyone - for anything.

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.

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 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, neither the American Express Platinum credit card, i24 credit card or the Egg credit card have limits on their cash back offers.

- 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, 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.

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