Choosing to pay for your Christmas shopping using a credit card that offers rewards or cashback can be a great way of earning something back as you spend.
And according to a new review of the credit card market by the Financial Conduct Authority, one in three of us choose a credit card specifically because of the rewards on offer.
So here’s our round-up of some of the best cards offering cashback and rewards to help your money go further this Christmas.
Top for rewards
A number of cards enable you to collect points or rewards when you spend which can then be redeemed at shops or online.
As an extra bonus, many of these cards come with 0% introductory offers on purchases, allowing you to spread the cost of your spending interest-free over a number of months.
Sainsbury’s Bank is feeling particularly generous in the run up to Christmas and has temporarily increased the number of Nectar points you can earn on its credit cards in store, so long as you apply before December 29.
You’ll earn 4 points for every £1 spent in store or on fuel, up from the previous 2 points per £1, for a period of three months. After that, you’ll go back to earning 2 points per £1 spent.
There’s no change to the number of points you get when you use the cards elsewhere, so you’ll continue to earn 1 point per £5 spent.
You can use these points to slice money off your Sainsbury’s food bill (every 500 points you earn is worth £2.50) or at selected retailers (including Argos and Homebase) or restaurants.
The Purchase card offers a competitive 0% introductory rate on spending for 25 months, while the Dual Offer card offers 0% on both purchases and balance transfers for 21 months (there is a 3% balance transfer fee).
After the introductory periods end, both cards charge a representative rate of 18.9% APR (variable)* so be sure to clear your balance before then.
If you shop regularly at Marks & Spencer, you might prefer the M&S Credit Card instead.
When you apply for the card, you’ll receive 500 bonus M&S points (worth £5) and you then earn one point per £1 you spend in M&S, and one point per £2 you spend elsewhere.
The card also offers a 0% introductory rate on purchases, but for a shorter 19 months. After that you’ll pay a representative rate of 18.9% APR (variable)*.
Not all credit card providers believe Christmas is the season for giving
Tesco Bank is playing Scrooge this festive season by halving the number of Clubcard points you can earn on its credit cards outside its stores from December 1.
Instead of getting one point for every £4 spent on shopping outside the supermarket, from December you’ll only earn one point for every £8 you spend.
However, there’s no change to the number of points you’ll earn in Tesco stores and at Tesco petrol stations. So as your credit card doubles as your Clubcard, this means you’ll continue to get five Clubcard points for every £4 spent.
Tesco Bank is playing Scrooge this festive season by halving the number of Clubcard points you can earn on its credit cards outside its stores from December 1
One point is equivalent to 1p if redeemed at Tesco but up to 4p if swapped for reward vouchers for things like days out or eating out.
Tesco Bank’s Clubcard credit card for purchases offers 0% on spending for 21 months, while its 17 month 0% purchase card offers 1,000 bonus Clubcard points providing you spend on it within the first two months.
After the introductory 0% periods are up, you’ll pay a representative rate of 18.9% APR (variable)**.
Earlier this year, Capital One and RBS also reduced the rewards their cards offer, blaming a new cap on interchange fees which credit card providers charge retailers which comes into force on December 9.
That means it’s more important than ever to make the most of the best reward offers while they’re around, even if they are only temporary.
Top cards for cashback
If you’d rather earn cashback than rewards on your Christmas spending, the American Express Platinum Cashback Everyday Credit Card is worth a look.
It allows you to earn 5% cashback on spending up to £2,000 in the first three months, making it ideal for your Christmas spending. The maximum cashback you can earn in this period is £100.
After the first three months, cashback rates are tiered. You earn 0.5% on your annual spending up to £3,500, 1% cashback on spending from £3,501 to £7,500, and 1.25% on annual spending above £7,500. You must spend at least £3,000 to get any cashback.
However, you must be sure you can pay off your balance in full each month as the card has a representative rate of 22.9% APR (variable)***.
Another option is Santander’s 123 credit card.
As well as offering cashback of 1% on spending up to £300 per month in supermarkets, 2% on spending in department stores up to £150 a month and 3% cashback on your spending on transport up to £100 a month, the bank has just introduced an extra cashback offer.
You’ll get 3% bonus cashback on all purchases made using Apple Pay, on spending up to £100 per month. This offer will run until February 29, 2016.
This card has a £24 annual fee, although if you apply on or after January 11, 2016, you’ll pay £3 a month.
The card also offers 0% on purchases and balance transfers for 23 months (there’s no transfer fee during this period), but once the 23 months are up, a 3% transfer fee applies and you’ll pay 12.7% pa (variable). This is equivalent to a representative rate of 16.5% APR (variable)****.
*Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).
**Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).
***Representative Example: If you spend £1,200 at a purchase interest rate of 22.9% p.a. (variable) your representative rate will be 22.9% APR (variable).
****Representative Example: If you spend £1,200 at a purchase interest rate of 12.7% p.a. (variable) with a £24 annual fee your representative rate will be 16.5% APR (variable).
All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.
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.