Beginner's Guide To: Cashback credit cards
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.It's a common misconception that the benefit of a credit card to those who clear their balance each month, is that their money stays in their current account earning interest for a bit longer. There are, however, deals out there which enable you to earn money each time you use them – so effectively profit from your spending. This week we take a look at cashback credit cards.
How does cashback work?
Cashback credit cards reward you each time you spend. The current market leader is the American Express Platinum Cashback card. It pays 5 per cent cashback for the first three months, or up to a spend of £2,000 – this means you could earn £100 if you spent the maximum £2,000 during that period. The cashback rate then drops: you earn 0.5 per cent on the next £3,500 spent on the card, 1 per cent on spending between £3,501 and £10,000 and 1.5 per cent above £10,000.
The cashback you earn accumulates and is either credited to your credit card account once a year, or you'll be sent a cheque for the amount you've accrued.
Are there any catches?
Cashback credit cards are only worth considering if you clear your bill in full each month. If not, the interest you'll be charged on the outstanding balance will far outweigh the value of the cashback reward.
What about alternatives?
Cashback isn't the only option if you are looking for a card that rewards you for spending. A number of other cards offer similar benefits, but rather than earning cash each time you use the card you accumulate points, including Nectar or Tesco Clubcard points, which can be exchanged for things such as shopping vouchers, magazine subscriptions and days out. Another popular reward scheme is Airmiles, where you collect "miles" that can then be used pay for flights.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments