Christmas savings: how the right credit card pays you to shop
We look at the best cashback and rewards cards and how they can cut the cost of your Christmas shopping and gifts.
You probably aren't even thinking about Christmas yet – unless you're one of those super-organised individuals, of course.
But there's no denying that it's an extremely expensive time of year.
Whether you splash out on decorations, luxury advent calendars or a feast for the family, you’ll be spending much more than usual.
So, with that in mind, why not spend a few minutes now ensuring you'll get paid something back for all your impending shopping?
Cashback and rewards credit cards give you a little bit for your spending, whether that’s money in your account, air miles or vouchers.
The benefit of these cards is that they’re simple: you don’t necessarily need to go to specific shops or select specific offers. You just need to use the card and pay off the full balance every month.
Why Christmas? Well, not only will you get more rewards, but many of these cards have limited time bonuses, or spending targets, which can be difficult to hit at other, cheaper, times in the year.
But if you are thinking of getting one, you’ll need to do so soon, before your Christmas shopping begins.
Remember, it can take a couple of weeks for your credit card to arrive.
Why use a credit card for Christmas?
Aside from the cashback opportunities, using your credit card rather than a debit card has one big advantage: Section 75 protection.
That means that you can get your money back for defective or undelivered goods, providing you spent over £100 in a single transaction. You’ll get your money back even if the shop you bought it from went bust.
With the chaos following the collapse of House of Fraser, and the perilous state of the high street, this Section 75 protection is certainly worth considering.
Compare credit cards on loveMONEY’s comparison site
Cashback cards
Before opting for a cashback card, bear in mind that the interest rates on these cards can be high.
You’ll need to know that you can pay off the full balance each month to avoid getting hit by these charges. If not, they’re best avoided.
The top-earning fee-free card, by a distance, is the American Express Platinum Cashback Everyday Card.
It pays 5% cashback on purchases in the first free months, up to a value of £100: ideal for the Christmas period. It then pays a lower rate of 0.5% thereafter (rising to 1% for spends above £5,000).
Alternately, if you do most of your shopping at supermarkets, then NatWest’s Reward Credit Card offers 1% cashback at supermarkets and potentially more at partner retailers.
To avoid its £24 annual fee, you’ll need to pair it with a Rewards Current Account - which is currently offering £125 to switchers and cashback on bills (find out more here).
Our Christmas cashback card picks:
|
Card |
Cashback rate |
Interest rate (APR) |
Fee |
|
5% for first three months; 0.5% thereafter* |
22.9% |
N/A |
|
|
1% at supermarkets; 1-15% at partner retailers; 0.5% elsewhere |
23.7% |
£24 – waived for Reward Current Account holders |
|
|
Tandem |
0.5% |
18.9% |
N/A |
*rising to 1% once you spend over £5,000 in a year
Rewards cards
These cards are slightly more complicated than cashback cards and work best if you’re a frequent flyer or a regular visitor to a particular shopping chain.
The benefit of rewards cards that if you spend enough, some offer bonuses that could get you that dream holiday (or spending spree) faster than cashback cards.
Again, always pay these cards off each month to avoid steep interest rates.
The fee-free British Airways American Express Credit Card will give you 5,000 Avios if you can spend £1,000 or more within the first three months of card membership.
Virgin Atlantic offers an equivalent card with no minimum spend requirement.
If you’re likely to spend more, the American Express Preferred Rewards Gold Credit Card, which offers 20,000 Membership Rewards Points if you can spend £2,000 in the first three months of card membership (read more about it here).
Tesco, John Lewis, Debenhams, M&S and Nectar (Sainsbury’s) also offer rewards cards; read more here.
Our Christmas rewards card picks:
|
Card |
Bonus |
Rewards rate |
Interest rate (APR) |
Fee |
|
5,000 Avios for spending £1,000 in three months |
1 Avios per £1 |
22.9% |
N/A |
|
|
5,000 Flying Club miles for first spend |
0.75 Flying Club Miles per £1 |
22.9% |
N/A |
|
|
American Express Rewards Gold Credit Card |
20,000 Membership Rewards Points for spend spending £2,000 in three months |
1 Membership Reward Point per £1 |
22.9% |
£140, but waived for first year |
|
£20 M&S voucher on first spend |
2 M&S points per £1 in M&S; 1 point/£5 elsewhere |
19.9% |
N/A |
Cashback sites
It’s also worth singing up to cashback sites like Quidco and Top Cashback before starting your Christmas shopping.
Signing up is free, and these sites can offer substantial amounts of cashback for making mainly online purchases at vast array of retailers.
Compare cashback and rewards credit cards on loveMONEY's comparison site
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