Credit Card Freebies

Over half of us have credit cards which offer no benefits - but free books, cheaper petrol and even cold hard cash are available to those in the know.

Do you have a credit card? If so, do you gain anything from it -- and by that I mean do you earn loyalty points, cashback or other extras? Because according to recent research from Goldfish cards, over half of us (52%) have credit cards that offer no benefits at all.

Now, of course, if you're carrying debt on a credit card that currently gives you a 0% rate for balance transfers, you're right not to worry about extras. After all, as a good Fool you'll have transferred your balance and cut up the card.

However, for those that always pay off their balance in full, credit cards can offer many benefits. Freebies on offer include loyalty points for your favourite store, Airmiles or even good old cash.

Cashback Cards

Indeed, cashback cards usually offer the most lucrative deal, as they reward you with that widely accepted loyalty point system known as money. Essentially, you earn a percentage of anything you spend on the card back as cash. So spend £100 on a 1% card, and you'll earn £1 in cashback.

The money earned is usually paid once a year by cheque, or credit on the account and how you spend it is up to you. According to Goldfish's survey around one in five of us (21%) have a cashback card, and with them we're racking up stacks of free money, each year.

Of course, the more you spend on the card, the more cashback you'll earn, so to really max out you'll need to move the majority of your spending to plastic. Petrol, groceries and retail shopping will all add up, and the really organised could pay some bills with plastic. But all cards are not the same; here are a couple of the best offerings available at the moment:

Top Cashback Payers

American Express Platinum Card

This currently offers a whopping 3% cashback for the first 3 months for all new card members. This is followed by 0.5% for the first £3,500 spent on the card, 1% for spending of £3,500-£10k, and 1.5% for any spending after that.

So if you were to spend £500/month, you could earn £80 over the year. Spend £1k a month and you could earn over £142. However, American Express is still not quite as widely accepted as MasterCard and Visa, so you may need to continue paying for the odd thing with the debit card.

MorganStanleyPlatinum Card

This card currently offers 1% cashback for the first £2,000 spent on the card and 0.5% for all spending after that. However, the interesting thing here is that, until 1 July 2007 this cashback will be tripled.

Spend £500/month and you could earn over £67 in a year. Spend £1k or more and you could earn £110 in cashback.

However, it's worth noting that with the Morgan Stanley card the onus is now on you to ask for your cashback cheque (once you've earned £15) as it isn't automatically given -- and you need to claim it in chunks of £15, too.

Other cards offering cashback include Yorkshire BS, Leeds BS and Alliance & Leicester(amongst many others).

Egg Money Card

Finally, the Egg Money card is a cashback credit card that works slightly differently. For a start, you'll get 1% cashback for anything you buy. However, you can also choose to pre-pay money into your Egg Money account, which you can spend with the card, and this money will earn interest at 4%AER. And if you choose to buy from any of Egg's selected retailers you could earn up to 20% cashback. Find out more from the Egg Money site.

Loyalty Credit Cards

However, if your wallet currently holds a variety of loyalty cards, a linked credit card may be a more interesting choice. The Nectar card, for example, offers up to 4 points for every £1 spent at Nectar retailers. Tesco Clubcard credit card members receive five points for every £4 spent instore and one point for every £4 spent elsewhere.

However, both Tesco and Nectar also offer free loyalty cards. Therefore, unless you're a huge loyalty points fan, using the free card in conjunction with a cashback card will probably be the most lucrative option.

Loyalty card credit cards become more interesting when offered by companies that offer no other type of loyalty points. Shop at Asda regularly and by using its credit card you could be quids in; not only will you earn loyalty points for your first £6k spend, you'll get 2p off per litre of fuel purchased at Asda, a 5% discount in George and Asda Living high street stores and free shopping delivery, if you spend over £99.

If you regularly shop at Amazon, signing up to the Amazon card could be worthwhile. You'll receive £15 in Amazon vouchers when you make your first purchase, plus you'll earn one point per pound spent in store (0.5 points elsewhere). When you've earned 1500 points you'll get another £15 voucher.

And for those keen on travel, the BMIBaby card gives a free return flight with your first purchase, and if you spend £5k or more over the year, you'll earn another flight.

However, before you rush to apply here are a couple of warnings:

Loyalty and cashback credit cards are only for those that pay off their bills in full, each month -- if you don't the interest and fees accrued will more than wipe out the freebies.
Do not use these cards for balance transfers! Keep spending and balance transfer cards completely separate (unless you happen to find a card offering exactly the same 0% deal for balance transfers and new purchases).

If you can comply with the rules, consider switching to a loyalty or cashback card -- and get something back for your spending.

More: Credit Card Crackdown