Best reward and cashback cards

Credit cards that reward you for spending on them are proving increasingly popular and a new scheme from Barclaycard, Freedom, means consumers now have even more choice. But which are the best schemes? We take a look.

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What is Freedom?

Freedom is automatically available to the majority of Barclaycard’s existing 8.6million customers – the exception being former Goldfish and Morgan Stanley customers who have Barclaycards that already give cashback or rewards.

New customers will also qualify and this is regardless of which Barclaycard they take out. This makes Freedom different from most other reward or cashback schemes as they tend to only be available on specific products. So whether you opt for a Barclaycard Simplicity, Platinum or Initial card you can make use of Freedom (there are other Barclaycard products to choose from).

With Freedom, customers earn money back when they use their Barclaycard at participating retailers. In most cases this is 1.00% (0.50% with Shell) although there will be special promotions either from Barclaycard itself, or specific retailers. For the first two months for example, the earn rate is 2.00%.

Retailers signed up to the scheme include Pizza Express, Shell, Flight Centre, npower and Yo Sushi. For more information visit barclaycardfreedom.co.uk.

How do you use the Reward Money?

When you put your card into the chip and pin terminal you will see the value of the Reward Money you have accumulated and be given the option of whether you want to use some or all of it towards your purchase. To learn more about how Freedom works watch our video ‘Spend money, make money’.

This is a far more flexible scheme than many – most reward schemes require you to exchange your points for vouchers, items such as electrical goods, holidays, flights and days or nights out; while cashback cards tend to work by crediting the cashback you’ve accumulated to your credit card account once a year.

Freedom also offers one of the most generous ‘earn rates’. However, you obviously don’t earn Reward Money on every purchase – only those made with participating retailers - so it is relatively restrictive, although its attractiveness will obviously increase as more partners sign up.

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So what are the alternatives?

Cashback

American Express Cashback Platinum – If you can get it, this is the most generous reward card available. Aimed at high spenders you earn 5.00% cashback for the first three months up to a maximum spend of £2,000 – so in the first few months alone you could net yourself £100 just for putting your shopping on the card.

Once the introductory offer has ended, you then earn 0.50% on the next £3,500 spent on the card, 1.00% on spending between £3,500 and £7,500 and 1.25% once you’ve spent more than £7,500 with the card.

The standard rate of interest is high at 19.90% so it really is important to make sure you pay your balance off each month.

Bear in mind that Amex isn’t as widely accepted as Visa and MasterCard so there may be times when this card isn’t accepted. Also, Amex cards are notoriously difficult to qualify for, so unless you have a squeaky clean credit history you have little chance of being accepted.

Rewards

There are loads of cards offering reward points. What these can be spent on varies, so before you sign up for a rewards card it’s worth checking you'd use them.

American Express Express Rewards Card – Another attractive deal from American Express, although rather than earning cashback you earn reward points, which can then be exchanged for high street vouchers.

You earn three points for every £1 spent in supermarkets (up to a maximum spend of £500 per month), two points for every £1 spent in department stores and one point for every pound spent elsewhere. And if you spend £500 on the card in the first three months, you’ll receive 6,000 bonus points – 1,000 points is worth £5 in vouchers.

You can exchange points for vouchers at stores including M&S, House of Fraser, Comet, Homebase, Boots, Molton Brown and even Harrods or Tiffany.

Purchases are interest free for six months after which you’ll be charged the standard annual percentage rate of 17.90%.


MBNA Platinum Rewards Card – This is quite a flexible reward card as points can be exchanged into cashback which is credit to your credit card account, or they can be redeemed for vouchers from a number of high street stores such as John Lewis and Debenhams. You earn one point for every pound spent on the card and 5,000 points equals £20 cashback.

It’s therefore not as generous as the Amex cards mentioned above as you’d need to spend £25,000 on the card to earn £100 cashback. But it’s a Visa card, which is more widely accepted than Amex.

The standard rate of interest is 15.9%.

Lloyds TSB Airmiles Duo Card – Airmiles is one of the most popular loyalty programmes. With this deal you get two cards (but only one PIN). One is an American Express card that gives you one Airmile for every £10 spent. However, because Amex isn't accepted everywhere, you also get a MasterCard. The reward for spending on this card isn’t as generous – you earn one Airmile for every £50 spent on the card.

Airmiles can obviously be used for flights, but there are other things your miles can be exchanged for. They can also be spent on days out, hotels and car hire.

The interest rate on this card is 15.90%.

Sainsbury’s Credit Card – If you’re a regular shopper at Sainsbury’s, this could be a great card.

You earn Nectar points each time you spend on the card – two points for every pound spent in Sainsbury’s during the first two years and one point for every £5 spend elsewhere. You can also still use your standard Nectar card as well (where it’s accepted), which means you build up points more quickly.

Another attractive element of the this credit card is that it offers a 10-month interest-free period on both purchases and balance transfers. Such a competitive 0% offering is unusual for a rewards card.

The MBNA products mentioned above have competitive balance transfer offers but I didn’t mention them because the whole point of a rewards card is to get something back for spending. If you make a balance transfer onto either of these cards you’ll be caught out because your monthly payments will go towards paying off the cheapest debt first ie. the transferred balance. You’ll then be charged interest on your purchases, which will outweigh the value of the rewards.

The Sainsbury’s Credit Card is the only reward card where you won’t lose out by transferring a balance on to it.

The standard rate of interest on this card is 15.9%.

Tesco Clubcard Credit Card – The Sainsbury’s card won’t appeal if you do your weekly shop at Tesco, but Tesco’s Clubcard Credit Card might. It offers a 12-month interest-free period on purchases so you can benefit from being able to spread your repayments as well as being rewarded for your spending. You should clear your balance by the end of the interest-free period as you’ll be charged interest at 15.9% thereafter.

You earn one Tesco Clubcard point for every £4 spent on the card. You can also use your standard Clubcard for your Tesco shopping to earn more points (you earn two points for every pound). Clubcard points can be exchanged for Tesco vouchers – 100 points is worth a £1 voucher. You can also exchange points for Airmiles - a £2.50 equals 60 Airmiles.

Marks & Spencer Credit Card – This is a great option for fans of M&S. You earn one point for every pound spent in M&S and one point for every £2 spent elsewhere. You can then exchange your points for M&S vouchers – 100 points is worth a £1 voucher.

Credit card customers also receive exclusive bonus point offers from time to time.

The annual rate of interest is 15.9%.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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