Cashback is just one of a long list of incentives on offer from the credit card companies to get your business and then to hang on to that business. But don’t go thinking that this is credit cards crashing onto the hunting grounds of the high street banks; this is not cash doled out freely in great wads of readies, as we shall see.
When Is Cash or Not?
Every time you use your credit card the issuing company makes money from you. It might not be obvious, like that total interest figure on the bottom of your monthly statement, but one of life’s certainties is that every time you use your card the lender is making money. Cashback is the lender’s way of suggesting they are giving you some of that money back again.
What’s the Catch?
If you are one of those incredibly organized and disciplined people that manage to pay off their credit card bill in full at the end each month then you can certainly go for these cards without losing out.
On the other hand, if you leave a balance in your account each month then you could be in trouble. These cards certainly give you something, but they also take something back too – generally, the cards offering cash back have a slightly higher interest rate than some of the others on offer. So even if you have just a small balance left each month you could end up paying the credit card company more in interest than you earn as cashback.
Not only might you end up paying the credit card company more than you get back but you really do have to take a good look at the small print of these cards. Most of them are not offering you cash back straight away, or instant cashback as it’s known. EGG is the notable exception to this rule but you have to go to their website and click on the very clear links to take advantage of their instant cashback offers.
Cash Back Period
Most other companies give you cashback on an annual basis and limit how much they will let you have. For example, the Abbey card says “Spend and earn at the same time with up to 1% cash back”.
All well and good, but the small print reads: “ Spend between £1 and £500 per month, and you’ll earn cash back at a rate of 0.5% of spend. Once you’ve spent over £500 per month, all new spend will earn cashback at a rate of 1% of spend”.
What that means is, you’ve got to fork out £500 before you get the 1%. And it will be a very long time before you see it back…The Abbey continues, “The total amount of cashback accumulated in a single year will be credited in one amount on 1 December each year.”
So, handy for Christmas, then. So long as you want to use your credit card to spend that cash freshly allocated to it.
By the time December rolls around you may just have changed your credit card provider. And that of course, is the whole point of cashback it encourages customer loyalty.
Where Can I Get Cash Back?
Currently, the following lenders offer the most popular cash back credit cards:
- Morgan Stanley Platinum
- American Express (Platinum, Blue, Nectar card)
- Alliance & Leicester
- Bank of Ireland
- Halifax One Visa
- Cahoot (on selected purchases)
- Lloyds TSB Create Card
- Nationwide cash reward card
The bottom line is, if you want cashback credit cards, as always, shop around. If it’s what you’re really after, then spend the time to make your comparisons between the different companies and choose the best cashback credit card on the market. Ask the questions and you can always try negotiating with them to get a better deal if you feel the APR is too high. Their reaction will depend on how much they want your money.