You can think of cashback as an incentive to spend on your cashback card – the more you spend, the more you can earn.
When you spend money on your cashback card, you’ll receive a small percentage of the amount spent. For example, if your card has a 1% cashback rate, you’ll receive £10 when you spend £1,000.
Some cashback credit cards also have introductory rates, meaning you’ll earn more cashback for a set period after you take out the card. Other cards have varying cashback rates depending on where you spend.
Credit cards are the most common type of card to offer cashback, although debit cards can offer it too.
With a cashback credit card, cashback is paid into your bank account or rewarded to you as credit either monthly or annually, depending on the type of card you have. This differs from other types of rewards cards, where you might earn points to redeem instead.
If you have an outstanding balance, the cashback will reduce the amount owing on the card. If you’ve paid off your card and no balance is due, the cashback will be available for you to spend.
With a cashback debit card, you’ll only get money back into your bank account. This might also be monthly or annually, depending on the type of card you have.
Generally, cashback rates are between 1% and 2%. However, individual rates will depend on your credit card provider. For example, you may get higher rates if you spend a certain amount, or if you spend in a certain shop.
If cashback credit cards aren’t a good fit for you, there are other credit cards available that offer rewards and incentives, such 0% interest on purchases and air miles.
While cashback and reward points can be a smart way to benefit from your everyday spending, it’s important to always spend within your means and understand exactly how the reward program works.
You need to be confident you’ll be able to repay your balance in full each month, as well as any annual fee. If not, you may end up paying more in interest and fees than you earn in rewards.
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Credit is subject to status. Eligibility criteria and fees may apply.
