Focus on: Amex offers 5% cashback with no annual fee

Recent weeks have seen the introduction of several new cashback and reward cards, but the biggest downside of many of these is that they charge an annual fee.

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Amex’s recently launched Platinum Cashback Everyday fee-free card, however, is a welcome exception. The card offers 5% cashback for the first three months up to £2,000 of spending but crucially does not charge an annual fee. Amex has also made improvements to its existing Platinum Cashback card, which comes with a £25 annual charge.

We take a closer look at the new Amex card stacks up against the competition, and what the changes to the Platinum Cashback card mean for new and existing customers…

What’s the deal?

If you spend £2,000 on the new Amex Platinum Cashback Everyday Card in the first three months, you can earn a maximum £100 cashback. Cashback is paid on your supermarket, petrol, travel and entertainment spending – so virtually all your everyday purchases. 

After the first three months, cashback rates per month are tiered, so you earn 0.5% on spending up to £3,500, 1% on spending between £3,500 and £7,500 and 1.25% on spending over £7,500.

This card has a representative annual percentage rate (APR) of 19.9% (variable), so you’ll need to make sure you clear your balance in full each month.

The existing Platinum Cashback card, meanwhile, enables you to earn 5% cashback on the first £2,500 of purchases in the first three months, but comes with a £25 annual fee. You could previously only earn this rate of cashback on spending up to £2,000, which meant cashback was capped at £100, but now the limit has been raised to £2,500, so the maximum you can earn in the first three months is £125.

After the first three months is up, you earn a competitive flat rate of 1.25% per month on all purchases.

With the Platinum Cashback card, you get a further 2.5% cashback during the anniversary month when you first took out the card, provided you have spent more than £10,000 on it the previous year. If you don’t pay off your balance in full each month, the card charges an APR of 14% on purchases. However, as a result of the annual fee, the representative APR on the card is higher than the purchase rate at 18.5% (variable).

Any catches?

Both these cards will only suit those who can clear their credit card balance in full each month. If you can’t do this, then the Platinum Cashback Everyday and Platinum Cashback cards charge representative APRs of 19.9% and 18.5% respectively, which will soon wipe out the benefit of any cashback you have earned.

The biggest drawback of the Platinum Cashback card is the annual fee, although if you tend to use a credit card for the majority of your spending, you should soon be able to cover the cost of this and earn more on top from the cashback you receive.

While cashback limits in the first three months are now more generous, unfortunately only new customers will benefit from this offer. Existing customers’ cashback will still be capped at £100 during this period.

What’s the verdict?

If you tend to put pretty much all your spending on your credit card, then despite its annual fee, the Platinum Cashback card may still be a better bet than the Everyday card due to its higher flat cashback rate.

For example, if you spent £10,000 in the first year, you could earn £193.75 in cashback with the Platinum Cashback card (that’s £218.75 less the £25 annual fee), compared to £178.75 with the Platinum Cashback Everyday card.

There are other cashback card options which come with an annual fee that are worth considering too. For example, the Barclaycard Cashback card offers a market-leading 6% cashback in the first three months on your five biggest purchases each month, up to a maximum value of £120. After that it pays 2% cashback on your top five purchases, provided you make at least 15 purchases a month, and 0.5% cashback on all other spending.

In addition to this there is an anniversary ‘thank you’ bonus every year, so that you earn 4% on your top five purchases during the month that you took out the card.

The Barclaycard Cashback card has a £24 annual fee, and charges a representative annual percentage rate (APR) of 24.6% (variable).

The APR on purchases is 19.9%. Remember, however, that if you don’t make at least 15 purchases a month, you won’t qualify for the 2% cashback rate, so this card is likely to suit those who use their credit card for the majority of their spending.

Top tip!

Remember that the very best cashback credit card deals only go to those with excellent credit scores.  It is worth checking your credit rating before applying for any of the credit cards mentioned above. If you make several credit card applications which are refused, this can jeopardise your chances of being accepted for credit in the future.

Use the MoneySupermarket Smartsearch tool to find the best cards for your circumstances, without damaging your credit rating.

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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