If you’re struggling to decide which cashback credit card you’ll get the most out of, then you’re in the right place. Here’s a round-up of what to look for.

Frequently thought questions

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What is a cashback credit card?

It’s a type of rewards credit card that earns you cash every time you use it to buy things (although there may be some limits, so check the Ts and Cs). The amount of cash you get back will depend on how much you spend and where you’ve spent it. 

How do cashback cards work?

Some cashback cards are associated with certain shops and you’ll usually earn more cashback for shopping in these affiliated stores or supermarkets. Other cards may offer a flat rate of cashback regardless of where you shop, or they could reward you with differential cashback rates at a variety of retailers.

How you get your cash reward depends on the card provider. It could be in the form of vouchers or money into your bank account, or it could be credited back to your card account. Some card providers will even give you the option of turning your cashback into a charitable donation.

There may or may not be a cap on how much cashback you receive, so always check the terms and conditions before you sign up for this type of credit card – or you could end up disappointed.

Like other types of credit card, there’ll be a limit to how much you can spend on a cashback card. If you go over that limit, you may end up with a charge and it could affect your credit rating. In some instances, you might even have your account closed by the card provider.

What should I look out for in a cashback credit card?

Some cashback cards come with annual fees, so make sure you check. Then work out whether you’ll spend enough on the card to make paying the fee worthwhile.

Typically, cashback cards have a higher than average annual percentage rate, or APR – this is how much borrowing on your card will cost you once you take into account additional fees and charges if you don’t pay off the balance each month.

You should also bear in mind that the interest rate advertised – the ‘representative example’ – won’t always be the one that you’ll get. The deal you’ll be offered will depend on your credit rating.

Consider any introductory offers and decide whether they’re worth taking advantage of, and make a note of when they end.

Is a cashback card right for me?

Cashback cards sound like a win-win, but they aren’t for everyone. Because they rarely promote low interest rates, they’re typically best suited to people who pay off the full balance of their credit card each month. If that doesn’t sound like you, then be warned that the interest you end up paying could far outweigh any cashback benefits you get.

You should make sure that the credit card you choose actually gives you cashback to spend in places you’ll shop. So, if you always buy your food from a particular supermarket, there’s not much point getting a cashback card offered by a rival chain.

It’s all too tempting to go for a cashback card purely because you think you’re getting something for nothing, but it’s important to look at the bigger picture. See what else the card has to offer – such as 0% interest on balance transfers or new purchases – which is handy if you know you’ll need to buy some pricey items in the near future.

If you travel a lot and use your card abroad, then consider a card that doesn’t charge you for making cash withdrawals when abroad. And some credit card providers waive foreign transaction fees – the amount you’re typically charged every time you make a purchase in another country.

How do I compare cashback credit cards?

If you decide a cashback card is for you, then the next step is to look for one that you’ll get the most out of, based on your spending habits. When you compare cashback credit cards with us, we’ll show you via our partners at Lovemoney Financial Services Ltd what’s on offer and highlight the key features of each one, helping you to choose a credit card that’s right for you.