Love it or hate it, you can't escape the run up to Christmas which is slowly beginning to take force. This year make sure you're fully prepared for all your festive spending with the right kind of credit card.
It’s now just weeks until Christmas. This year, why not earn something back on your spending with a reward credit card?
How reward credit cards work
In a similar way to cashback credit cards, every time you buy something you’ll then earn rewards which can be anything from Nectar points to a free holiday.
Using a card like this for Christmas spending is a good way to get some extra freebies, but to get the benefit you have to make sure you pay off the card each month.
Generally these cards can have a higher interest rate than a standard credit card so if you pile on a load of debt, the amount you’ll fork out in interest payments will negate any benefits you’re getting.
How to use a reward card
Most reward cards will start to dish out freebies when you’ve spent a certain amount on them. This isn’t a reason to go on a big spending spree just to get the rewards, instead you should use a card like this for all your normal shopping.
At the end of the month you can pay the balance off, and if you’re not going to remember to do this, set up a Direct Debit so it’ll happen automatically.
What are the best cards?
Unlike cashback cards where you’ll earn a percentage of your spending back in cash, there’s a huge variety in the type and number of rewards on offer from reward cards.
Tesco Clubcard for example, pays out one club card point per £4 spent on any transaction. These points are transferred into vouchers or can be used to get money-off vouchers at any of Tesco’s partner retailers such as Pizza Express.
The card from Sainsbury's works in a similar way and with many of these cards there are competitive introductory offers. The NatWest and Royal Bank of Scotland Your Points cards pays out 2,500 points when you open it while Barclaycard will pay an extra £30 in points if you spend £500 in the first three months.
I’ve picked out some of the best below.
The top rewards credit cards
|
Card |
Rewards |
APR |
|
One Clubcard point per £4 spend. Five points for each £4 spent in a Tesco store. |
16.9% |
|
|
One reward point per every £2 spent, one point for every £1 spent on fuel. |
16.9% |
|
|
One point for every £1 spent, two points for every £1 spent in UK supermarkets and petrol stations, three points spend at Freedom partners. An extra £30-worth of bonus points if you spend £500 or more in the first three months. Free Mr B cuddly toy. |
18.9% |
|
|
Four points for every £1 spent in store, one point for every £5 spent elsewhere. In the first three months you’ll get an extra six points per £1 spent in Sainsbury’s stores for the first £1,000 you spend each month. |
17.9% |
|
|
Earn one Membership Reward point (redeemable against flights and shopping) for every £1 you spend. Earn double points on your travel spending and for the first 12 months on your petrol and major supermarket spending. Spend £2,000 in the first three months and get 20,000 bonus points. Note that this is a charge card, not a credit card, so you need to pay your balance off in full each month. It also has an annual fee of £125, although this is being waived at the moment for the first year. |
N/A |
|
|
NatWest/Royal Bank of Scotland Your Points MasterCard |
One point earned for every £1 you spend. Points can be redeemed at a wide range of retailers or on events such as spa days. You also receive 2,500 bonus points when you open the card and each year on your anniversary. |
17.9% |
|
If you spend £500 of more in the first three months you’ll receive 9,000 Avios points (enough for a free flight to the UK or Western Europe, although you'll have to pay taxes and fee on top). If you spend £20,000 in the first 12 months and use the Avios points to book a British Airways flight you’ll get another ticket free. |
15.9% |
|
|
Flybe credit card |
Earn one Rewards4All point for every £250 you spend. Apply now and spend on the card to get one free flight to selected destinations (not including taxes and charges) and two free Executive Lounge passes. |
18.9% |
|
With this account you’ll get two cards. On one you collect one flying club mile for every £1 spent on the American Express, and on the other you’ll get one flying club mile for every £2 spent on the Visa credit card. |
17.9% |
|
|
Lloyds TSB duo Avios credit card |
Collect one Avios for every £1 spent on your American Express card and one point for every £5 spent on your MasterCard. |
15.9% |
|
Marks & Spencer credit card |
Earn one point for every £1 you spend in M&S and one point for every £2 you spend elsewhere. Every 100 points gives you £1 in M&S vouchers. |
15.9% |
|
John Lewis Waitrose Partnership credit card |
Earn one point for every £1 spent at John Lewis, JohnLewis.com, Waitrose, Waitrose.com, John Lewis Insurance and Greenbee.com. Earn one point for every £2 spent elsewhere. Five hundred points is worth £5 in John Lewis vouchers. |
16.9% |
What other options are there?
If you can’t find a card to suit your spending and aren’t interested in the rewards on offer, a cashback credit card might be more up your street. These pay a percentage of the cash you spend back to you and if you combine these with cashback websites when shopping online, you’ll make even more money.
Depending on your situation, it might be worthwhile choosing a card which also has a 0% purchase period, so you don’t pay any interest initially, or an extended balance transfer period for transferring over bad debt.