Are cashback and reward credit cards getting worse?
Barclaycard has pulled its leading cashback credit card, while Lloyds has ended a major introductory bonus on a rewards credit card.
In the past two weeks Barclaycard and Lloyds have withdrawn two of the best offers in the cashback and reward sector of the credit card market.
Barclaycard pulled its High 5 credit card, which was launched at the start of June and paid out up to 6% cashback on certain items bought on the card.
Lloyds TSB also withdrew its bonus offer of up to 20,000 Avios points for new customers of its Duo Avios cards.
It is bad news as it means there’s less choice if you're looking for a card that will reward you for spending on it.
However, it may only be a temporary blip as card companies often reconsider their offerings.The American Express Platinum Cashback Everyday Card, for example, was bought out last October but pulled in February and then re-launched in the summer. On the American Express Platinum Card on the other hand the cashback rate dropped in February only to be increased again last month.
They are now arguably the top cashback credit cards. I'll explain why and look at some of the other top alternatives for both cashback and rewards.
Top cards for cashback
The Everyday Card pays out a market-leading 5% on purchases, up to a maximum of £100, during the first three months.
The rate then becomes tiered depending on how much you spend. Anything up to £3,500 will earn 0.5% cashback, on up to £7,500 you’ll earn 1% and anything over will pay out 1.25%. There’s no fee and the annual representative APR is 19.9%.
Santander also has a competitive credit card with its 123 credit card. This pays out cashback on a range of different purchases. Any supermarket shopping will earn 1%, on department stores it’s 2%, rising to 3% for petrol stations and travel. The one catch with this one is an annual fee of £24 but this will be waived for the first 12 months if you have a 123 Current Account.
Our comparison tables show a fuller view of this market but here I’ve listed the top five.
|
Card |
Cashback |
APR |
|
5% on purchases up to £2,000 for the first three months (up to £100). Up to 1.25% afterwards. |
19.9% |
|
|
1% cashback at the supermarket, 2% at department stores and 3% on petrol and travel. £24 annual fee (except for customers with a 123 current account). |
22.8% |
|
|
5% on purchases up to £2,500 for the first three months (up to £125). 1.25% afterwards. £25 annual fee. |
18.7% |
|
|
0.5% cashback on purchases up to £6,000, 1% on £6,000 to £10,000 and 1.25% for purchases of £10,000 and over. |
19.9% |
|
|
£5 cashback each month when you spend £250 in Sainsbury’s and £250 elsewhere. 5% cashback on monthly spend of £1,000 (for the first three months). |
17.9% |
Top cards for rewards
Lloyds dropped the bonus Avios points offer on its Duo Avios and Premier Duo Avios cards on the 15th September. They allowed new customers to get up to 20,000 Avios which could be redeemed on a range of rewards such as flights, Eurostar travel and travel insurance.
Both cards are still available, and the free Duo Avios card offering is still among the market leaders for rewards, providing you're a big credit card spender. You get two cards: an American Express and a MasterCard. You earn one Avios per £1 spent on the American Express card and one Avios per £5 spent on the MasterCard.
The next best deal comes from Barclaycard with its Freedom Rewards credit card. It’s more of a reward card than a cashback card and pays out points when you shop. Double points are available at certain retailers, such as supermarkets, petrol stations and on Transport for London (TfL) purchases. Some shops also pay out triple points such as; Café Rouge, Goldsmiths and Strada.
Our comparison tables show more options but here I’ve listed the top five reward cards on the market right now.
|
Card |
Rewards |
APR |
|
Double Freedom points in UK supermarkets, petrol stations and on Transport for London (TfL). Triple points at selected Freedom partners such as BHS, Bella Italia, Café Rouge, Currys, PC World, Goldsmiths and Strada (terms and conditions apply). |
18.9% |
|
|
One Avios per £1 spent on the Lloyds TSB Duo Avios American Express Card and one Avios per £5 spent on the Lloyds TSB Duo Avios MasterCard. |
17.9% |
|
|
Earn 20,000 Membership Reward Points when you spend £2,000 in the first three months, plus double points on petrol and supermarket purchases in the first year. There's an annual fee of £125, but it's waived in the first year. Note that this is a charge card, not a credit card, so balance must be paid off in full each month. |
N/A |
|
|
One Clubcard point awarded per £4 spent. Five points awarded per £4 spent in Tesco stores and on fuel at Tesco Petrol Filling Stations (excludes Esso Fuel). |
16.9% |
|
|
Earn one point for every £1 spent on card. Points can be redeemed on anything from flights and holidays, shopping vouchers, spa experiences and theatre nights. Customers receive 2,500 bonus points shortly after receiving the card and each year thereafter. |
16.9% |
Choosing the right credit card
The credit card market is dominated by a few big players and therefore the deals on offer aren’t that different to each other.
The best way to get around this is to keep an eye on what’s going on as providers regularly announce bonuses for new customers, such as the 20,000 Nectar points currently on offer to customers who spend £2,000 on the American Express Nectar credit card in the first three months (note that this card has a £25 annual fee).
Cashback and reward cards are helpful as they pay you to shop but they only work if you clear the balance each month. Racking up debt on one of these will be expensive as typically the APR rates are higher than most other credit cards.
If you’re in debt, or looking for a breather from pricey interest payments, a 0% balance transfer credit card might be a better option.
More on credit cards
The best reward credit cards
The best cashback credit cards
How to build an excellent credit history
The best credit cards to use on your travels
Capital One launches Vauxhall Rewards credit card
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