And now there are two new cashback credit cards on the block – both designed to reward you on your everyday spending.
Let’s take a closer look the latest offerings from sister banks, NatWest and RBS…
What’s the deal?
The new Cashback Plus Credit Cards from NatWest and RBS offer 1% cashback on all supermarket spending (but not petrol forecourts) and a minimum of 1% cashback at selected Cashback Plus retailers, which include BP, Cineworld and The Body Shop.
The cards also offer free balance transfers
Who’s it good for?You’ll also get 1% back on all contactless transactions until March 31, 2015 and 0.5% on all other purchases whether you are spending at home or abroad.
The cards also offer free balance transfers – but they don't come with any interest-free period.
These identical cards are ideal for anyone willing to do their everyday spending on a credit card and pay the balance off in full at the end of each month. This is the only way to really make the most of the cashback rewards on offer.
If free money is being given away, there has to be a catch, right?
The main snag with these cards is that they come with a £24 annual fee. And once this has been factored in, the representative APR jumps from an advertised 12.9% to 17.4% (both variable and representative) – that said, even 17.4% is less than market-average.
And while the cards come with a fee-free balance transfer facility, they charge the same 17.4% APR on your debt once it lands.
If it’s the fee-free balance transfer and not the cashback that you are most interested in, the Tesco Clubcard Credit Card with No Fee, is also free to shift debt to AND will provide a 12-month interest-free shelter once you do.
What’s the verdict?
These cards are welcome new contenders to the cashback credit card market – and should be weighed against their competitors when it comes to making your choice.
For example, although Santander’s 123 card offers up to 3% cashback, it still only offers 1% on supermarket spending and so, in that respect, matches the NatWest and RBS cards.
However, where NatWest and RBS don’t offer cashback on fuel, Santander pays 3% on this type of spend (up to a maximum of £9 a month) so could prove a better option for frequent drivers. It all depends how you use the card in your wallet.
Santander’s 123 card also offers 18 months purchasing power at 0% interest, which is great if you are planning to buy something big and want to spread the cost. Its annual fee of £24 matches NatWest and RBS.
If you’re after a higher rate of cashback just for spending between now and Christmas, the American Express Platinum Cashback Credit Card offers 5% on up to £2,500 of purchases in the first three months, and cashback at a rate of 1.25% thereafter.
It too levies a similar annual fee of £25 which pushes the representative APR up to 18.7% (variable). And, although Amex is now widely accepted (at around 90% of retailers), still not everywhere will take it, so you’ll need another card to hand just in case.
Before choosing a credit card, always work out exactly how and why you’ll be using it – if you want to make money back on your everyday spending, and you have the discipline to pay your balance off at the end of each month, cards like these are ideal.
If, however, you tend to rack up a larger balance and pay it off over time, the interest you pay on a cashback card will outweigh any rewards you make back and so you’ll be better off looking for a card that primarily focuses on interest-free period on purchases.
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.