With less than a month remaining until Christmas and the subsequent Boxing Day sales, we tell you how cashback cards can put money back in your pocket.
December is already with us, meaning some well-organised shoppers will already be on their final stretch of this year’s marathon Christmas shopping – and the savvy ones will be using their credit cards.
The right credit card can offer great rewards when used correctly, with benefits including interest-free periods, shopping rewards and points that can be redeemed for flights and cashback.
Golden age of cashback
‘Tis the season to be jolly and this is also the period when a cashback credit card can be particularly rewarding. Christmas is usually an expensive time because of all the presents and partying, so rather than let all that spend go unrewarded, why not use a cashback credit card?
Unlike rewards cards, which usually offer benefits based on where you spend, cashback – which simply involves you getting back a percentage of the money you splash out – can be earned no matter where you shop, making them perfect for Christmas shopping.
This is a golden age of cashback credit cards as consumers have never had so many to choose from. Last month financial research company Defaqto revealed that there are now 22 cashback cards, double the 11 that were available in October 2010.
But like in every scenario, it’s vital to sort out the wheat from the chaff. We highlight the best of the bunch and if any of them takes your fancy, apply for it right away to ensure it’s with you before the potentially rewarding festive opportunity is gone. Even if you don’t get it in time for Christmas itself, you can still make use of it during the sales.
Barclaycard Cashback Card
The Barclaycard Cashback Card is currently the queen of all cashback credit cards thanks to its knockout 6% three-month introductory offer. However, the rate only applies to the top five purchases made during this period. You can earn up to £120 cashback from them.
Afterwards the card switches to 2% cashback on the five biggest monthly purchases, but everything else out of the top five will still get you 0.5% cashback from day one, meaning you can continue getting back some of your money throughout 2013.
You’ll need to use your card 15 times in any particular month for the 2% booster to kick in, but there’s an anniversary “thank you” bonus of 4% on the top five monthly purchases every year, which will be paid no matter how much you have spent in the previous year. The card has a £24 annual fee.
AmEx Platinum Cashback & Everyday
Not far behind is the American Express Platinum Cashback credit card, which pays 5% cashback on the first £2,500 spent within the first three months of obtaining the card, handy if you are planning to spoil your loved ones this Christmas.
This means you can earn up to £125 cashback in the first three months. However, this will be reduced to £100 thanks to the credit card’s annual fee of £25. If you want to extend your rewards beyond Christmas and Boxing Day sales, the card offers 1.25% cashback on virtually everything you buy.
You also get 2.5% cashback in the first month of every year, but this is dependent on you whacking more than £10,000 on the card in the previous 12 months, which you should only do if you can afford to pay it all back.
Its sister, the American Express Platinum Cashback Everyday Card, would also be perfect for Christmas spenders as it offers 5% cashback in the first three months on up to £2,000, meaning you can earn up to £100 cashback.
Crucially, there’s no annual fee, so you get to keep all the money. Up to 1.25% cashback is available after the initial introductory period, but you need to spend more than £7,501 to earn this.
Note that you need an income of at least £20,000 a year to qualify for both of these cards.
Capital One Aspire World & Elite
Up to £100 cashback is also available with the Capital One Aspire Worldcard, which offers 5% cashback on what’s put on the card during the first 99 days (around three months).
There’s no annual fee, but the cashback rates paid afterwards are unappetising, so you need to maximise the benefits during the Christmas and New Year sales spending period. Its 1.25% cashback rate is only available on purchases from £10,000 onwards.
You will need a minimum income of £20,000 a year to qualify.
Its sibling, Aspire Elite, which also offers 5% cashback on everything bought on the card in the first 99 days, allows you to earn up to £200 cashback during that time.
However, its enticing £200 ceiling soon starts to look less appealing when the £120 annual fee is taken into consideration, meaning the reward will be just £80. Even its 2% cashback rate afterwards on all purchases has a caveat – it only kicks in after you’ve spent more than £15,000 and up to £50,000. There’s just 1% cashback on the first 15,000.
Also note you must earn at least £50,000 a year to qualify.
Pay it off on time
You should only go for a cashback credit card if you’re sure you’ll be able to clear whatever you’ve put on the card in full every single month, otherwise the typically high interest rates will wipe away any gains you make.
So if you were going to turn to your savings to fund Christmas, use your credit card instead in order to enjoy the consumer protection it provides, and earn cashback, and transfer the money from your account to the card as soon as your statement arrives.
If you don’t think you will be able to do this, a card offering interest-free purchases should be your target as it gives you time to clear your balance without worrying about interest charges.