Looking For Cash Back Credit Cards in the UK?

Alfred Erickson Garcia

If you’re looking to improve your credit and also make back some cash, it’s a good idea to start looking into a Cash Back Credit Card, which pay you a certain percentage rate on purchases you make. However, you’ll want to take some time to understand Cash Back Cards before you apply, so you can max out your benefits.

What are Cash Back Credit Cards?

Cash Back Credit Cards are exactly what they sound like, they give you a percentage of cash back for every purchase you make with the card. Although Cash Back Credit Cards are more rare in the UK these days, they give you more freedom since you’re able to spend that cash on anything you want or need, rather than be limited to a rewards points system that other credit cards might offer. What’s important to remember is to do your research first, and understand how different cash back credit cards work before you pick and choose a cash back card.

How Do Cash Back Cards Work?

Different cash back cards offer different percentage rates. For instance, some cards will offer you a higher percentage of 1.5% if you spend it at partnered supermarkets, but only offer 0.5% back on all other purchases. Other cards might offer a welcome bonus, where they pay you a higher cash back rate of 5% for the first three months after signing up. Once this period is over, the card will go back to normal and pay you a rate of 1% on purchases. In another instance, a card might require you to spend a specific amount of money on the card before paying out a higher cash back rate. So, the card might pay 1% cash back on all purchases, but after you spend £3000, it will start paying you 3% back.

What Should You Consider Before Applying?

With so many different types of cash back credit cards, it’s important to take the following into consideration before you choose a card.

  • 1. Cash Back Rate: You definitely will want to pay attention to the cash back rate when you’re looking for a new card. Think about where you spend the most money. If you often eat out at restaurants or like to travel, find a card that will offer you a higher cash back rate in those categories. Your spending habits are what is going to maximize the benefits you can earn from a cash back card.

  • 2. Annual Fees: Certain Cash Back Cards will charge an annual membership fee, and this can be a deal breaker for some people. If you don’t plan on using your Cash Back Card often, it might not be worth it to have because the annual fee may be higher than the amount of cash back you can earn.

  • 3. Welcome Offers or Signup Bonuses: Always check if the card you are considering offers some type of introductory bonus. A lot of times, banks will give you some type of perk for signing up for a new card, like offering a high cash back rate for the first three months of opening a new account. You can use this to your advantage, if you plan on making a large purchase and maximize the amount of cash back you can earn.

  • 4. Interest Rates: Be sure to understand what interest rates the card will charge if you don’t pay off your balance right away. Most cash back cards will charge higher interest rates, so they are better if you can pay off the balance in full each month. A lot of cards will also offer a Introductory 0% interest for the first year when you sign up. Keep this in mind if you plan on making large purchases and paying off the card over time. You can use this to your advantage before the card returns back to its normal interest rates.

  • 5.Your Credit Score: Most Cash Back Cards will require you to be in good standing with your credit score. Some cards might require you to have better credit scores than others.It’s always a good idea to frequently check your credit, and always make sure you’re paying off bills on time. If you’re planning on needing other lines of credit, such as a home loan, you might want to take this into consideration because applying for a new Cash Back Card will temporarily lower your credit score.

Cash Back Cards can be really beneficial and a great way to get free cash back into your bank account. However, you should be always be cautious of your spending and make sure you pay off all your bills on time. One rule of thumb is to treat your new cash back card as if it were a debit card. This way you will still be reaping the rewards, and you also won’t slip into potential debt.

Not all Cash Back Cards are suited for everyone, since everyone has different spending habits. If you don’t plan on using your new card often, it might not be worth it to get one, especially if you have to pay an annual fee. But in general, do your research and think about your spending habits so you can find the best Cash Back Card for you.

Resources:

1. https://www.fool.co.uk/mywallethero/best-credit-cards/cashback/#american-express-platinum-cashback-credit-card
2. https://www.moneysavingexpert.com/credit-cards/cashback-credit-cards/
3. https://www.money.co.uk/credit-cards/cashback-credit-cards.htm
4. https://www.cardratings.com/best-credit-cards-for-cash-back-rewards.html

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