Barclaycard’s new offering pays a record 6% cashback for the first three months on the five things you spend most on. You’ll then earn up to 2% cashback on your top five monthly purchases and 0.5% on everything else. But as with any competitive offer, there are a few catches, so you’ll need to read the small print carefully.
Here, we explain exactly how the card works in to help you decide if it could be the right choice for you….
What’s the deal?
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 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%.
According to research by MoneySupermarket, based on a monthly spend of £1,000, using the new Barclaycard could potentially earn you £221 cashback over the year, even after the annual fee has been deducted, placing it top of the best buy tables.
To qualify for the 2% cashback rate, you’ll need to use your card 15 times a month, so this offer is only likely to suit those who use a credit card for the majority of their spending.
The annual fee is another drawback, and the card won’t be worth having unless you earn enough cashback to outweigh this cost.
You also MUST be in a position to clear your credit card debts every month. If you don’t do this, then the interest you are charged on your spending is likely to cost much more than any cashback you earn.
Barclaycard’s 6% introductory cashback offer makes this card the market leader, but it is designed for those who use credit cards for most of their spending. If you don’t put at least 15 purchases on the card each month, then you will earn the lower 0.5% rate on your spending, and may want to consider an alternative cashback card.
The next best cashback card for example, is the American Express Platinum Cashback card. This enables you to earn 5% cashback on up to £2,500 of purchases in the first three months, up to a maximum of £125, and then 1.25% cashback on everything you buy. There is no minimum number of purchases required to qualify for this rate. You get double cashback of 2.5% for one month every year to mark the anniversary of you taking out the card. This card has a representative APR of 18.5% (variable) and an annual fee of £25.
Other cashback cards worth considering include Santander’s 123 card, which pays you 1% cashback on any spending at supermarkets (in store or online), 2% on purchases made in department stores and 3% on your fuel and transport spending. The card has a £24 annual fee.
The maximum you can earn on travel spending is £9 a month, which means you'll stop earning cashback for that month if you spend more than £300 on fuel (or more recently on National Rail and Transport for London travel), or a combination of these. There's no upper cap on the amount you can earn on supermarket or department store spending.
If you can’t pay off your credit card balance in full every month, then a cashback or reward card won’t be the right choice for you.
Instead, you should focus on the cards which charge you the lowest interest rates on your spending. That means either going for a card which offers a lengthy 0% introductory period on purchases, or a card which offers a consistently low rate.
Current competitive cards offering 0% on purchases include Tesco’s Clubcard Credit Card for purchases, which has a 16-month 0% period and Halifax’s All in One card which has a 15-month 0% introductory period. After the 0% periods finish, these cards have representative APRs of 16.9% and 17.9% (variable) respectively.
For a consistently low rate, the Sainsbury’s Low Rate Credit Card and Barclaycard’s Platinum Simplicity card charge representative APRs of 6.9% and 7.9% (variable) respectively.
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. We’re free, independent and compare all UK credit cards, as well as offering exclusive deals you can’t get anywhere else. Contact MoneySupermarket.com at Moneysupermarket House, St David’s Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2011.