1. Let’s learn about the different types of rewards you can get with a credit card
The highest cash-back paying credit card is Platinum Cash back AmEx Credit Card but you need to get a high limit and spend a lot to qualify for a high cash back hence it can’t be suitable for all of us
(5% cashback on 3,000 for first 3 months then up to 1.25% depending on your spend), so you can get up to £125 of a cash back for the £3000 spent in the first three months (you get £150 but if we take away the credit card fee of £25 we will end up with £125 worth of cashback money). After the first three months every pound you spend generates 1.25% cashback.
Amex Platinum Cash back Everyday Credit Card is equally good there’s no annual fee and you can get 5% cashback on spending up to £2000 (£100) in your first three months and up to 1.25% after that period.
MSG TIP: I‘d recommend using the above mentioned against a planned one – off purchase when you are buying an expensive item and can pay the total using Amex credit card.
1-2-3 Santander Credit Card is a great option for those of us who can’t get a huge limit and are spending less. The card offers generous cash backs:
• 1% cashback at all major supermarkets
• 2% cashback at all major department stores
• 3% cashback at all major petrol stations, and on National Rail and Transport for London travel, including Santander Cycles (on combined spend of up to £300 a month so up to £9 per month which is up to £108 per year)
The card cost £24 a year hence I’d advise to get it alongside 1-2-3 current account to cover it by that account fee for the first year of using this credit card and to maximise on cashbacks offered also by the saving account (having the saving account allows you to save 1-3% of interest rates on balances from £1k to £20k –> if you have at least 2 standing orders and at least £500 coming to your account each month).
The £2 fee for the account is being usually covered by the cashback you get from the bills standing orders you have set up on this account.
If you switch your bank account to Santander using a cashback sites such as Top Cash Back you can get up to £36.75 cash back for getting 123 Current Account and £13.12 for Santander Credit Card.
It looks like the best ‘points’ card is MBNA credit card, it can get you 4points per 1£ for the first 90 days on the Amex& VISA card and later you will get 2 points for every £1 spent on the Amex card* and 1 point on VISA card.
2000 points* will give you a voucher of £10 you will need 5000 points for £20 in cash (You can use the vouchers in Argos, Debenhams Topshop & more shops). Bear in mind you need to spend £1000 to get 2,000 points worth of £10 so unless you have exhausted other credit card points & vouchers cash backs from elsewhere having combined Santander 123 debit and credit card may be a far better cash back deal.
Lloyds Bank Choice Rewards Credit Card Account can give you some cash back too but its Mastercard cash back is lower than MBNA or Santander additionally their credit card fee is £24/year. It is well worth it when its Amex card but sadly you cant pay with Amex everywhere.
2. What the supermarket credit cards offer and how much can you earn by using them?
Top supermarket cards
Tesco – 5 pts/£4 spent in Tesco + 1 pt for £4 spent elsewhere. 1 point is worth 1p but points value can be boosted up to 4times when using Tesco Club Card Boost Reward Scheme. It’s also 19 months 0% on spending.
Sainsbury’s– 2pt/£1in Sainsbury’s &1 pt/£5 spent elsewhere
John Lewis – 1 pt/£1 spent in JL and 1 pt/ £2 spent elsewhere.
M&S – 1 pt/£1 spent in M&S and 1pt/£2 spent elsewhere. Points are then converted into M&S vouchers every three months.
Asda – 1% cashback
3. What about other options if you don’t tend to shop in one supermarket ?
Most of the supermarket credit cards allow you to get points when you shop not only in those supermarkets but also elsewhere. Usually you get less points than in those certain shops. The only downside of those deals is the fact that you are restricted with your cashback since you usually get vouchers to be used in those supermarkets or in associated with those supermarkets places.
That’s why you may consider Santander 123 Credit card since it is one of not many card which gives you actual money cashback but it is not great and equals only 1% of the shopping value, so usually it is a few pence unless you spend a significant amount of money on your shopping.
MSG TIP:If you do a weekly shopping for 4 people and spend £100 in Tesco using Tesco Credit Card you can get 125 Tesco club card points which equals £1.25. If you shop in any other supermarket than Tesco you will get 25 points which is worth £0.25 but even such a small amount can be boosted (once you accumulate those points and their value over some time and decide to boost them for vouchers other than Tesco discount shopping vouchers you can treat your family to a day out or a dinner in some of Tesco Club card partners, so it can give you far more in return than spending the mentioned £100 in any shop when paying for it using 1% cashback credit card (e.g.123 Santander credit card since it will give you only £1 ROI). So in my opinion 1% cash back credit cards can’t offer such a nice return on the grocery spent unless you are spending a significant amount of money on your grocery in which case you will be still better off when using Tesco or a similar credit card.
Santander 123 is a great card when you need to get a department store cashback (up to 2%) or when you spent up to £300 on your petrol or train/tube tickets
3. The rewards on cashback cards can be a bit complicated – often it’s XX% for the first few months or a different rate on certain spending. Are they better if you’re planning a big purchase rather than ongoing spending or can the cashback really add up?
It depends on your plans. It’s definitely hard to memorise all the conditions applying to certain cards/time frames etc. Therefore I would suggest using credit cards offering cashback rewards with a special short time offers on a significant spent used against a one off expensive purchase. For example if you are planning to buy an expensive appliance or furniture piece worth up to £3000 check with the item supplier if it is possible to use Platinum Cash back AmEx Credit Card for that purchase and if it’s possible get the card to pay for that item. Then make sure you clear your credit card balance in full and enjoy the earned cashback. For small and regular purchases use cards which offer set array of benefits. So use Santander 123 for 3% cash back petrol or train/tube ticket prices and Tesco Club Card Credit card for regular shopping to get vouchers you can use elsewhere. What’s important is the fact that both cards Tesco ClubCard Credit Card and Santander 123 offer 21 and 23 months 0% interest free, so you may be spending the money now, while getting your salary into your saving account and benefiting from the % rate on that money. Do not forget that one day you will have to pay for the accumulated spent over this time so ‘save for later’ making your money working harder 🙂
4. Some banks offer cashback on debit card spending. Who offers it and how can you get it?
Currently the best saving account offering some cashback scheme for debit card spent is offered by Santander it allows us to get 3% of interest rate on balances £3k-20k and 1-3% of cashback on the utility bills (provided that you have at least 2 standing orders set up and at least £500 coming to this account each month). All in all using this account you can get £600 of interest rate money on balance of £20k and the fee for that account will be most likely covered by the cashback received for the utility bills.
On the top of that you can get up to 15% of a cashback on spending at your favourite shops (there is a list of around 100 of them, including New Look, Argos, Gourmet Burger Kitchen, Hertz, Patisserie Valerie and Heals). The perk is offered to both new and existing account holders for free through their online banking.
Similar cash back offers are offered by Halifax.
When using NatWest or RBS card to pay for qualifying purchases at any of NatWest Cashback Plus retailers you can earn at least 1% of your spend back as Rewards (and 1% on all contactless payments). This offer is valid until 30 September 2015 though. There is also 10% of a cash back on the restaurant spent.