The new credit card that offers 5% cashback on ALL spending

This new card from Capital One offers a great rate of cashback, and will be accepted everywhere!
Capital One has launched a new World MasterCard, which in my view is potentially even better than the previous market-leading cashback credit card from American Express. Let’s take a look at the two cards, and why I think Capital One’s offering is so good.
The American Express Platinum Cashback card
For a long time now American Express has led the way when it comes to cashback. Its Platinum Cashback card offers a huge 5% on all of your spending in the first three months, up to a maximum of £100 in cashback.
After that, the rate of cashback you enjoy is tiered, depending on how much you spend on the card over the year. So if you spend less than £3,500, you’ll get 0.5% cashback, for sums between £3,500 and £7,500 you’ll get 1%, and if you spend more than £7,500 that cashback rate moves up to 1.25%.
What’s more, there’s no annual fee which eats into your cashback, and you pay 0% interest on your purchases for the first six months. So you’ll be able to really cash in from the start, interest free!
How does this add up? Well, with the Platinum Cashback card if you spend £12,000 in that first year, you’ll be looking at around £203 in cashback. Not bad - but can you do better with thenew Capital One card?
The Capital One World MasterCard
This week, it's clear Capital One has declared war on Amex with the launch of its World MasterCard. Because when you look at its features, it will no doubt seem strangely familiar...
For starters, during the first three months, the cashback rate you’ll enjoy with the World card is 5%, up to a maximum cashback total of £100. After that, tiered rates apply, between 0.5% and 1.25%, depending on how much you spend. Spooky, huh?
But at this point, there is a clear difference between the two cards. In order to get 1.25% cashback on your spending on the World card, you will need to have an outlay in excess of £10,000 on the card over the year, rather than £7,500 with the Amex, a difference of £2,500. That’s the equivalent of more than £200 extra a month on your credit card.
Meanwhile, you’ll have to spend £6,000 on the World card before you get 1% in cashback, again £2,500 more than with the Amex.
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See the guideSo you have to spend more on the Capital One to enjoy the full rate of cashback, and at no point is that spending interest free. With that in mind, how can it be better than the Amex?
Where you spend
As we are reminded whenever we write about any sort of American Express credit card, there is one big flaw with American Express – it is not accepted everywhere. So while you may intend to put all of your monthly spend on the card, in all likelihood at least some of your spending will have to go on an alternative piece of plastic, whether debit or credit. And that can be the difference between hitting the top tier of cashback or missing out when you come to the end of the year.
The Capital One card is a MasterCard, which means you’ll face no such issues. MasterCards are accepted pretty much everywhere, so you really will be able to put all of your spending on it, wherever you choose to splash your cash. So not only are you more likely to hit the top tier of cashback, but you will earn cashback on every penny you spend, not just every penny that the retailers will let you spend with your Amex.
It’s not for everyone
That said, the World card is fairly exclusive. You’ll need a perfect credit rating, a salary in excess of £20,000, and you must own your own home to qualify.
The best of the rest
These aren’t the only two cashback credit cards out there. MBNA offers a decent card in the shape of its Visa with Cashback, which offers 1.25% on all spending on supermarket and fuel purchases, and 0.5% on all spending elsewhere. This is clearly a decent option if you don’t spend a huge amount on your card each year, but you do tend to use your card a fair bit at the supermarket!
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Don’t change your spending habits!
At this point, it’s worth reiterating some fundamentals when it comes to using cashback credit cards. For starters, there is absolutely no point going for one of these cards if you’re not the sort of person who pays off their bill in full each month. Otherwise, the interest on your debt will far outweigh the benefits of the cashback.
And while it’s a good idea to put as much of your spending as possible on the card, that’s not an excuse to spend more than usual. Again, there’s no point racking up an extra couple of quid in cashback if you’ve spent beyond your means and will be financially stretched for a while. Use these cards to net yourself some extra cash - not to get into debt!
More: Compare credit cards | Shun this sneaky savings swindle | 10 top tips for personal loans
Comments
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As mentioned in an earlier comment, I think the best CashBack card is, almost certainly, the [B]Utility Warehouse Discount Club CashBack Card[/B], which I use. It's a Mastercard pre-paid cash payment card, not a credit or debit card (so you load it with money - a bit like topping-up a payg mobile phone). Using the Utility Warehouse Cashback Card, I earn between 3% and 7% cashback when shopping in around 40 major UK high-street retailers including ASDA, Boots, Comet, Marks & Spencer and Sainsburys [I]( [B]including Petrol[/B] )[/I], as well as getting cashback from about 1500 retailers online, using the UW 'Clubhouse' Shopping site. This is an ongoing benefit, month after month, and there's no minimum or maximum total spend, [B]the rates don't change with spend[/B] and there's no limit to the total cashback. [I](It was first reviewed by Alexandra Goss in the Sunday Times in April 2010, and compared as being far superior to the Amex Platinum card.)[/I] To get the card, you first become a Utility Warehouse member (which costs £2.50 a month), but then enabling you to switch some, or all, of your household utility services to the club for guaranteed savings every month [I]( [B]"Which?" magazine 'Recommended Provider' for Gas, Electricity, Telephony and Broadband[/B] )[/I] ... and now offering the UK's cheapest Mobile tariffs. Everything comes on one, single itemised, monthly bill ... and there are no minimum-term contracts. Utility Warehouse are currently [B]guaranteeing[/B] you'll save money when switching four or more services - [B]plus[/B] an additional 10% Energy Refund after 12 months - [B]and[/B] giving a "Double-the-Difference" Price Promise to back it all up. However many services you have from them, the cashback comes as a deduction, every month, off an already reduced, single, monthly utility bill for those services (and if your cashback is actually greater than the bill, then the surplus gets paid into your bank account !!) You can see full details at http://www.SaveALotMore.co.uk
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Good grief. Is there anyone commenting on here who doesn't have their own little side business to plug? It reads like an infomercial. "Gee Tony, that sounds too good to be true!" "That's right, Jenny, and all only for a small monthly fee..." Actually I would say the Amex is still the best. The places that don't take it are the places you don't spend much money anyway. Supermarkets, petrol stations and major high street shops take it, and you spend 95% of your money there. The only place I can think of that doesn't take it that you might spend a fair bit is B&Q. Then on things like flights and package holidays it's not worth using any credit card at all because of the additional fees the agents charge. Going abroad I now take cash, with my debit card for emergencies. As long as you feel safe doing that it means you don't pay a bank fee or a transaction fee or whatever other fees the banks like to throw in, and you get the best rates, fee free, because you can shop around (unlike with your bank card). There's also no risk your card will be rejected leaving you stranded because your bank decides, even if you warned them otherwise beforehand, that a fraudster has got hold of your card and is living it up at their expense. Sometimes you can even just take Sterling and get the best rates abroad, depending where you're going, although that's less good in the Eurozone where bureaus de change barely exist anymore. When buying currency in the UK watch out for the line "we check all the rates in the high steet so you don't have to." This invariably means "please don't check anyone else's rates as ours are a rip off." Any sizable town will have plenty of travel agents and currency exchanges to check - I've found dedicated exchange shops and Thomas Cook to be the best, but that's where I live - I'm sure each individual shop has it's own policy. The banks will be the worst but you also have the post office to try or even online (with a delivery charge).
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Jean2468 - I think you will find the main advantage between using your bank debit card and Kalixa is the currency rate of conversion. When I used Kalixa, I paid no transaction fees on purchases and got the best currency conversion rate possible. If you take out cash, you will probably pay a small cash fee, but again you get the best currency exchange rate. If you use your bank debit card, the bank usually gives you a useless rate of exchange on your money.
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25 July 2011