Get Paid To Spend!

Which credit cards have the most generous cashback rates? Find out here...

I can't deny I'm a bit of a shopaholic, so getting paid to spend sounds like a fantastic idea. That's why a cashback credit card really appeals to me.

A cashback credit card is a great way of earning extra cash on your purchases with the best buys offering pretty generous cashback rates. Some cards aren't particularly flexible and will only pay cashback on specific items such as your food shopping or petrol. I think you should avoid these cards and go for one which rewards you no matter what you choose to buy or how much you choose to spend.

An excellent example is the American Express Platinum credit card which offers a special introductory rate of 5% for the first three months on everything you buy. The maximum cashback you could receive breaks down like this:

You could earn up to £200 cashback during the three month bonus period if you spend £4,000 on the card. What's more, the cashback is uncapped at standard rates, which means you'll receive money back no matter how much you spend...

But remember American Express credit cards aren't accepted in quite as many places as say, Visa or Mastercard so you may occasionally find you can't use it. And you'll need to earn a salary of at least £20,000.

Another good choice is the Capital One Platinum Card With Bonus Cashback. Quite simply, with this card you'll earn a flat rate of 1% cashback on everything you buy and this is also uncapped so you can spend to your heart's content!

Let's have a look at what these rates mean in cold hard cash:

How Much Cashback Will I Get?

Where the three month bonus period applies on the American Express Platinum card, spending is assumed to be spread evenly over 12 months of the year.

As you can see, your cashback could easily mount up to several hundred pounds over the year if you use your card for regular spending and for large purchases such as a holiday or a new kitchen. To get the most out of your cashback card remember to use it for all your expenses such as groceries, filling up your car, buying new clothes and eating out.

You'll enjoy an evening at your favourite restaurant or a good pub lunch even more knowing it's earning you a little cash in return! So, get into the habit of using your plastic instead of paying for items with cash or your debit card and you'll be surprised how quickly your cashback builds up.

You'll certainly feel like you're getting something for nothing when you receive your cashback each year. But don't forget, you won't get any real benefits from these cards unless you pay your balance off in full every month. Every penny you pay in interest will wipe out a penny of cashback.

Late or missed payments are a big no-no too with the American Express card. That's because you'll wave goodbye to any cashback you would have earned for that month if the minimum payment doesn't arrive on time. And don't even think about exceeding your credit limit or the same thing will happen. With Capital One's cashback card, if you break the rules you'll still receive your full annual rebate, but it won't do your credit rating much good.

So cashback credit cards are only really suitable for people who are always on top of their spending. If this sounds like you, apply for one at The Motley Fool Credit Card Centre.

And finally as you probably already know, easy credit is now a thing of the past. Credit card companies, like many lenders, are becoming more selective over who they will lend to as a result of the credit crunch. Capital One says its cashback credit card is only for applicants with an excellent credit rating. If you have had credit problems you may wish to choose a different card.

Visit The Motley Fool Credit Card Centre.