The best credit cards for cashback

Cashback credit cards are a great way to get a small return every time you spend. They essentially pay a percentage back on each transaction.

Whereas some credit cards reward spending with points that can be redeemed for flights, hotels and all manner of exclusive offers, cashback cards may be more appealing to some shoppers because their function and purpose is simple. 

Cashback credit cards typically pay between 0.25 per cent and 1.25 per cent on each purchase, depending on what card you go for and how much you spend.

If you have a credit card that pays you a rate of 1 per cent, that means for every £100 you spend, you get £1 back.

Although the gains may seem slight, over time the cashback can mount up to a meaningful sum. For example if you were to spend £12,000 over the course of a year and earn 1 per cent on all spending, that would equate to £120.

Some cashback credit cards come with generous introductory offers which mean you can sometimes earn even more cashback for a period of time.

However, like with all credit cards it is important to be aware of any fees that might eat into your returns, whilst also ensuring you pay the card off in full each month to avoid being charged interest.

Rachel Springall, finance expert at Moneyfacts says: ‘Cashback offers are a great way for consumers to earn a little bit of cash when they shop or even when they have their bills go out. 

‘Consumers could be considering a cashback offer as the cost of living rises, but they must ensure their credit card is paid off each month and their current account stays in credit – or any cashback they earn could be wiped out by interest charges. 

‘There is usually some eligibility criteria to meet to get cashback, so it’s worth spending a little time checking terms and conditions to get the most out of any offer.’ 

This is Money decided to take a look at the six most lucrative credit cards and rank them accordingly.

Choose wisely: Cashback credit cards can pay anywhere between 0.25 per cent and 1.25 per cent depending on what card you go for and how much you spend

What’s there to like: This card gives 5 per cent cashback on all spending for the first three months of card membership, up to a maximum of £100.

Each year thereafter, you’ll receive 0.5 per cent cashback when spending up to £10,000 and 1 per cent cash back on everything you spend after that.

As long as you spend a minimum of £3,000 in each given year, every full £1 you spend on purchases qualifies for cashback.

There is also absolutely no monthly or annual charge to worry about.

For someone who spends £1,000 a month for the first year, they will earn £155 cashback taking into account the introductory offer.

It’s also worth noting that you can opt into a range of exclusive offers and discounts from various retail and travel partners. These will typically be available for a limited period of time.

The American Express Platinum cashback everyday credit card currently offers 5% cashback on any purchases for the first three months of card membership, up to a limit of £100

What to watch out for: If you fail to pay your bill off each month, you’ll be hit with a 25.7 per cent APR.

In addition, some UK retailers don’t accept Amex due to the fact that it charges them around 3 per cent for each sale they make.

Being aware of where you can and can’t use your American Express card is important – you can find out the places that accept Amex here.

There are now very few major chains that don’t accept it, but you are much more likely to have an issue when in smaller shops throughout the UK.

However, some notable organisations still don’t accept Amex including Tile Giant, Dunelm and Sky.

What’s there to like: Another offering from American Express, this time there is a small annual charge of £25 to pay – albeit for a slightly higher rate of cashback.

This card pays 0.75 per cent cashback on spending up to £10,000 and 1.25 per cent for everything over that amount in a given year.

Like the ‘everyday’ card detailed above, it offers 5 per cent cashback for the first three months – but with a higher limit of £125.

Someone spending £1,000 a month for the first year will earn £202.50 cashback taking into account the introductory offer.

What to watch out for: Other than the £25 annual fee, there will also be the issue that not all retailers accept Amex – although its acceptance is becoming increasingly widespread.

If you fail to pay it off each month you’ll be hit with a 31 per cent APR.

This card is very much the jack of all trades and master of none. In fact it, it almost matches the two Amex cards purely on its versatility.

This is because it’s not just a cashback card, it’s a balance transfer card and an overseas card.

It offers 0.5 per cent cashback on all spending as standard, but it is currently offering customers the chance to earn 1 per cent cashback when using the card abroad up until 18 September this year.

However, it’s worth noting that you need to spend at least £500 to be eligible and purchases must be made in the local currency.

One other cashback perk is its retailer offers, a free service that lets you earn up to 15 per cent cashback from a variety of major retailers.

The jack of all trades: Although Santander’s All in One Credit Card may not be the most lucrative card, it does have other perks

Once you switch on retailer offers, you’ll be able to choose the offers and earn cashback when using the card at those stores or online.

However, whilst this credit card is by no means the most lucrative cashback card on offer, it does come with two other benefits.

It offers 0 per cent interest on balance transfers for 26 months with no balance transfer fee.

Balance transfer cards have long provided a way to cut down on costly interest payments by transferring debts from your current credit card to a new card, often with the promise of 0 per cent interest for a fixed period of time.

Santander’s offer sits very much amongst the best in that category alone – particularly because it charges no fee on transfers.

It also charges no foreign exchange fees on overseas spending and cash withdrawals made abroad in the local currency.

What to watch out for: Unfortunately there is a £3 monthly fee. That mounts up to £36 each year.

Cash transaction fees will be charged on all cash withdrawals, and interest will be charged on the cash you take out from the day it’s withdrawn.

Make sure you pay off your balance each month or you’ll be hit with 24.7 per cent APR.

What’s there to like: Both these credit cards enable you to earn 0.25 per cent cashback on your first £4,000 and then 0.5 per cent thereafter each year.

There is no cap on the cashback you can earn, and there is also a £20 cashback bonus on your balance if you spend £1,000 within the first 90 days of the account opening.

This means someone spending £1,000 a month for the first 12 months could earn a total of £70 in cashback.

Spend more, earn more: Lloyds and Halifax will pay a higher cashback rate on all spending over £4,000 each year

Lloyds Banking group also has retailer offers which let you earn up to 15 per cent cashback on exclusive offers from a variety of major retailers.

There is also no monthly or annual fee to worry about with this card.

What to watch out for: There is nothing major to worry about, other than ensuring you pay it off each month to avoid being stung by the 19.9 per cent APR.

With this card you get 0.25 per cent cashback on all your everyday spending, plus no transaction fees when you’re abroad

Although the cashback is minimal, the card deserves a mention because of its overseas cost saving benefits.

Travel companion: Barclays is the least lucrative credit card on this list when it comes to cashback – but it also a great card for those wishing to spend without fees abroad 

You’ll be able to withdraw cash from an ATM or buy your souvenirs without any charges. The card also comes with no annual or monthly charges.

Barclays also gives access to retailer offers which lets you earn up to 15 per cent cashback on exclusive offers from a variety of major retailers. 

What to watch out for: Just remember to pay off your balance each month to avoid being hit by the 23.9 per cent APR.