Five top cashback credit cards

Rachel Wait gives you the lowdown on the best cashback credit cards on the market, including two brand new offerings...

Personally, I find having a credit card very useful. After all, it’s great for making purchases online and any purchases I do make with my credit card (providing they cost more than £100), benefit from Section 75 protection.

However, there’s one other advantage of using a credit card. And that’s the fact that credit cards can reward you for your spending – so you can earn cash back every time you spend!

That said, this is only worth it if you can afford to pay off your balance in full each month. If you can’t, you’ll be hit with a high rate of interest and this will far outweigh any cashback benefits.

But if you religiously clear your credit card balance each month, a cashback credit card could be well worth investing in. After all, if you’re spending the money anyway, you may as well be earning something back in return! So let's take a look at five of the best.

American Express at the top

For a while now, the American Express Platinum Credit Card has been at the top of its game, offering a cashback rate of 5% for the first three months up to £100. After that, you can earn up to 1.25% depending on how much you spend.

You’ll earn 0.5% cashback for amounts up to £3,500, 1% cashback for amounts between £3,501 and £7,500, and 1.25% for amounts over £7,501.

So this is a really great piece of plastic to have in your wallet if you have a lot of spending coming up over the next few months.

To give you more of an idea about how much money you could earn back, if you spent £1,000 a month (so £12,000 a year) on your American Express Platinum Credit Card, after the first year, you’d have earned back a total of £203.75! Not bad!

You can work out more calculations here. Just bear in mind that you need to spend a minimum of £3,000 on your card to receive your annual cashback.

But the advantages of this card don't end there. Last year, the American Express Platinum Credit Card got even better after it added a 0% on purchases deal into the mix, allowing you to enjoy six months interest-free on all your spending! So this means you won't have to pay any interest on your spending for six months, and at the same time, you can still earn cashback! Brilliant!

Just remember to clear the balance before the interest-free period is up, otherwise you’ll be hit with an interest rate of 19.9%.

Two new alternatives

But what if you’re not interested in applying for the American Express Platinum Credit Card? Or what if you already have the card but now that the three months 5% deal has expired, you’re not so impressed with it? Are there other options?

In short, the answer is yes. MBNA has just launched two new cashback credit cards that are particularly handy if you regularly use your credit card to buy petrol or food.

The first one is the MBNA Credit Card With Cashback Amex which allows you to earn 1.5% on petrol and supermarket purchases and 0.75% on other spending.

So let’s say you spend £3,000 a year on your card, with 70% of this going on petrol and supermarket purchases. In total, you would earn around £38 in cashback.

Boost your annual spend to £12,000 and you would earn nearly £153 (assuming 70% of your spend went on petrol and supermarket shopping). I think that’s pretty good going!

Taking this one step further, if you only used your card for petrol and supermarket purchases, this cashback level would rise to £180 (on an annual £12,000 spend). This isn’t far off the £203.75 you’d earn with the American Express Platinum Credit Card on the same spend. (And don't forget that in the second year, the amount you'd earn with the American Express Platinum card would be lower anyway due to no longer having the 5% offer.)

However, the major drawback is that, like the Platinum Card, this is an American Express card, so it won’t be accepted everywhere. That said, American Express is accepted by the majority of the major supermarkets (Tesco, Sainsbury’s, Morrisons, ASDA, Waitrose), and the major garages such as Shell, Esso and BP – so you shouldn’t have any problem getting your cashback on supermarket and fuel purchases!

Related how-to guide

Pay off your credit card debts

How to destroy your credit card debt quickly and effectively.

See the guide

But if you are worried about your card being accepted you might prefer MBNA’s second offering - the MBNA Credit Card with Cash Back Visa.

Visa is more widely accepted, but while this might be a good selling point, the downside is that the rate of cashback you’ll earn won’t be quite as good as that from the American Express card - although the rates are still competitive.

With the MBNA Credit Card with Cash Back Visa, you’ll earn 1.25% cashback on all supermarket and fuel purchases, and 0.5% cashback on everything else.

So, on an annual spend of £3,000 a year, with 70% of this going on petrol and supermarket purchases, you’d earn around £31 in cashback.

Boost your annual spend to £12,000 and you would earn £123 (assuming 70% of your spend went on petrol and supermarket shopping). If 100% of your spending went on petrol and supermarket purchases, you would earn £150 in cashback - so that's only £30 less than that earned from the MBNA American Express card.

Of course, if you spend significantly less than this on petrol and supermarket purchases, the amount of cashback you receive will be far smaller. But if that’s the case, I’m not sure these cards are really for you in the first place.

Further choices

If you’re still looking for another option, you could take a look at the Egg Money World MasterCard which earns you 1% cashback.

You’ll also be able to enjoy extra insurance with this credit card, such as missed event cover, purchase protection, extended warranty cover, price promise cover (if you find the item you've bought cheaper elsewhere, you’ll be refunded the difference) and travel accident insurance.

However, be warned that you will have to pay £1 a month for this card. So you’ll need to weigh up whether you think this fee is worth it – you’ll need to spend £1,200 a year to break even.

Similarly, the Capital One World MasterCard pays 1% unlimited cashback on all purchases. You will also receive a £10 bonus every January. However, you will have to pay an annual £18 fee, so to justify getting this card, you will need to spend at least £1,600 a year.

Finally, don't forget – whichever cashback credit card you decide to use, make sure you pay off the bill in full each month!

More: Get a cracking credit card | Sort out your finances at the supermarket  | The 20 month 0% credit card