The best cashback credit cards that reward your spending

MBNA scrapped two of its popular cashback and rewards credit cards last week, with such deals seemingly facing extinction. 

Indeed, Rachel Springall, finance expert at moneyfacts.co.uk, refers to it as ‘a progressively shrinking market’ in which the most common cashback return today is 0.50 per cent for everyday spending – that equates to just 50p for every £100 spent.

But there are still a few hidden gems – paying rates of up to 5 per cent – which disciplined credit card customers can use to their advantage, as long as they follow the rules.

So are there still any good deals out there to switch to?

American Express has long offered the top deal – and still does – particularly for those who can make the most of its introductory 5 per cent promotion.

It has two options. The first is its Cashback Everyday Credit Card paying 5 per cent for three months (capped at £100). After that, you earn tiered cashback. You get 0.5 per cent on up to £5,000 and then 1 per cent on further spending. You must spend a minimum of £3,000 on the card each year.

There is also the Platinum Cashback Credit Card that offers higher earning potential, but comes with a £25 annual fee.

It pays 5 per cent for the first three months (capped at £125) and then 1 per cent on spends up to £10,000, followed by 1.25 per cent for anything beyond that.

The best option for you depends on how much you are likely to spend on the card and how much of it will be within the first three months.

But as a guideline, a £750 per month spend on the fee-free version would earn £153.75 over the course of the first year, while the premium offering earns £180, or £155 after the £25 annual cost.

So you would need to spend just under £9,000 a year for the premium card to earn its keep.

Other options 

There are a few reward cards that offer flat rates of cashback of 0.5 per cent on all spending. 

They include Nationwide’s Select Credit Card that pays 0.5 per cent cashback on spending, but you must be a Flex current account holder. 

It has two free options, the Flex Account and the Flex Direct deal that pays 5 per cent interest on a balance of up to £2,500 for the first year.

Santander has an All in One credit card that pays 0.5 per cent cashback. The card comes with a monthly fee of £3, but 123 current account holders don’t pay the fee for the first six months.

NatWest’s Rewards Credit Card pays 1 per cent back on supermarket spending and anything spent with one of its MyRewards scheme retailers. Everything else clocks up 0.5 per cent. It costs £24 per year unless you have one of its Reward Current Accounts.

There are no 0 per cent interest deals attached and the card comes with an APR of 23.7 per cent, or 18.9 per cent per year on purchases. 

The Aqua Reward MasterCard pays 0.5 per cent on your spending (up to £100 per year) and free overseas spending. 

The card is designed for those with a low credit score so you must pay it off each month otherwise your balance clocks up interest at 34.9 per cent APR.

Then there are the cards that offer something similar to standard cashback cards – and they’re mainly from retailers.

For example, Asda’s Cashback Plus card offers 2 per cent back on your shopping with the supermarket and 1 per cent everywhere else with a £3 monthly fee.

Alternatively, its free Asda Cashback Credit Card pays 1 per cent on your Asda shop and 0.5 per cent on spending elsewhere.

These are only close to cashback deals though, as the cashback is paid in vouchers to use at the supermarket. Both come with six months of 0 per cent on purchases of at least £200 at George.com in the first six months.

You can read more about credit cards offering perks exclusively to existing customers and whether they are worth it here.

Pocket change: Cashback rates are not at the levels they once were

Why have lucrative perks been culled?

Back in 2015 a new EU law capped the amount credit card providers are able to charge merchants for processing card payments, reducing their earnings.

According to the string of credit card companies that quickly reduced their credit card offerings, the loss of income meant they could no longer afford to offer some of their more generous rewards and cashback schemes. 

American Express was not affected, but thanks to a ruling in July this year – any Amex cards offered through another credit card company – such as Barclaycard and MBNA – now are.

As many as 75,000 MBNA customers with Amex credit card deals had them whipped away last month. The cashback and rewards cards have been closed to new customers since October 2015, but from September 22 2017 they stopped earning any perks and they now have three months to redeem any cashback or rewards they have earned.

Cashback credit card customers earned 0.5 per cent on spending while rewards card customers earned one point per £1.

By the end of November customers will be send a replacement Visa card, which won’t come with any rewards for spending.

During the summer, Barclaycard switched around 500,000 of its cashback credit card customers from an Amex card that paid 1 per cent to a Visa card paying 0.5 per cent.