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Cash Back Credit Card

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    Cash Back Credit Card

    Somebody (Duncan I believe) recently sang the praises of cash-back credit cards.

    How do they work?

    Don't some have fees?

    How do you avoid interest?

    Are they worth having?
    See my cruise blog: HERE

    #2
    Hi Malcolm, the key to avoiding interest is paying off your balance in full every month - I do this via Direct Debit on my two cashback cards - use it wisely like you would for a debit card - don't spend what you don't have. A good way to ensure this is to set your credit limit at a maximum of tweice your average disposable income / what you generally spend for a month and use half a month.

    Check money saving expert and other such sites for the best buys, this will highlight any potential fees

    Comment


      #3
      How they work

      You spend on them, and at the end of the year you get a statement credit for the amount of cashback. Some cards offer vouchers instead, for example the Asda card or the Amazon card. Those ones 'pay out' more frequently.

      Fees

      Many of these cards have no annual fee. There is an American Express card which has no annual fee, and is the best pure cashback card on the market. They also offer a fee-paying one (£25) with an enhanced cash back rate. This only makes sense if you spend above a certain threshold, which I think I calculated to be around £9,000/year.

      Avoiding interest

      Any card offering cash back or rewards will generally have a high interest rate. For this to make any sense whatsoever, you absolutely must pay off the card every month, in full. A month of interest will definitely wipe out any reward benefits or cash back.

      Set up a direct debit for the full amount. Do your normal spend, no more than that. If you want to borrow on a credit card, get an interest free deal instead. Reward cards are NOT for you.

      Are they worth having?

      It depends on the person. I have a friend for whom this would not work. They are not disciplined enough with credit cards. You absolutely must pay them off in full for it to make any sense at all.

      If you are disciplined enough, I think it makes a lot of sense - in fact it's a 'no-brainer'. You get a reward for doing basically nothing. You also ensure your purchases are protected (section 75 protection). I almost never use my debit card, though there are times when fees are charged where the fee outweighs the benefit - debit card in those situations unless I feel the S.75 protection would be useful.

      That all said, my main credit card is not a cash back credit card. I use the British Airways Premium Plus credit card from American Express. If you are an Avios collector and wish to fly in premium cabins, it can make sense. It becomes a hobby, and you can 'earn' much more than 0.5% if you want to.

      If you're fond of certain chains of hotels, you might enjoy their credit card. The IHG Premium credit card, for example, offers permanent status with the chain and a free night when you hit a spend threshold, in addition to the points earned. These tangible rewards can feel a lot more interesting than a trickle of cash back!

      Happy to answer any specific questions anyone might have. I've spent rather too long researching this topic!
      Last edited by dst87, Falkirk; 26th July 2017, 09:49 AM.
      Duncan S

      See my blog!

      Comment


        #4
        Great question Malcolm.

        When using our credit card abroad, we get fees added, not much but they do add up. Is there one that doesn't charge to use it over seas? .................................................. ...........................................Carol

        Comment


          #5
          Originally posted by carol, welwyn garden city View Post
          Great question Malcolm.

          When using our credit card abroad, we get fees added, not much but they do add up. Is there one that doesn't charge to use it over seas? .................................................. ...........................................Carol
          There are not many travel best buys that also offer rewards or cash back.

          The Nationwide Select credit card offers 0.5% cash back, and zero foreign exchange, but the cash back is only on GBP purchases, so you can't combine the features. It's a good general-purpose card, but only available to Nationwide current account customers.

          The Lloyds Avios Duo card earns Avios and offers fee-free international use.

          Santander all-in-one credit card offers 0.5% cash back and fee-free international use, but the £3 fee means you'd need to spend £7,200 abroad per year to start beating the Nationwide offering.

          The Aqua Reward credit card (bad credit score card) offers 0.5% up to £100/year (£20k of spend) plus fee-free purchases abroad.

          If you don't care about the rewards abroad, there are other great cards for international use, like the classic Halifax Clarity card.
          Last edited by dst87, Falkirk; 26th July 2017, 10:09 AM.
          Duncan S

          See my blog!

          Comment


            #6
            Hi Carol there are a number that don't charge, Post Office, Nationwide and Aqua being a few examples - there may be certain criteria, again a comparison site is your best port of call

            Comment


              #7
              Originally posted by carol, welwyn garden city View Post
              Great question Malcolm.

              When using our credit card abroad, we get fees added, not much but they do add up. Is there one that doesn't charge to use it over seas? .................................................. ...........................................Carol
              Hi Carol, Martyn Lewis does a good section on his money saving expert website on credit cards that don't charge under travel.I have a Post Office Credit card specifically for travel abroad which doesn't charge fees but there are others.

              Comment


                #8
                Originally posted by carol, welwyn garden city View Post
                Great question Malcolm.

                When using our credit card abroad, we get fees added, not much but they do add up. Is there one that doesn't charge to use it over seas? .................................................. ...........................................Carol
                The Santander 123 gives cash back and doesn't charge for use abroad but there is a charge for the account which pays 1.5% interest. The Nationwide pays interest of 2.5% but again there is a charge but you get a package. There is another one that doesn't charge but gives cash back but I don't have that one.

                Comment


                  #9
                  Quite a few people have mentioned the MoneySavingExpert guides, but haven't provided a link, so I'll add the links here for reference.

                  Travel Credit Card Guide
                  Cashback Credit Card Guide
                  Best Card Rewards

                  And as a bonus:
                  Section 75 Protection guide

                  I don't necessarily agree with all of the conclusions on there, but it was one of the first places I started and it's a great website with a wealth of information about all sorts of issues. Definitely a site to know about if you don't already.
                  Duncan S

                  See my blog!

                  Comment


                    #10
                    Thank you everyone. It would be good to just have a card for overseas, so its separate to any thing else, so I shall get looking. Thank you all for the help and advice .................................................. .........................Carol

                    Comment


                      #11
                      Originally posted by carol, welwyn garden city View Post
                      Thank you everyone. It would be good to just have a card for overseas, so its separate to any thing else, so I shall get looking. Thank you all for the help and advice .................................................. .........................Carol
                      We use the Halifax clarity abroad, and for that purpose only, meaning that if anything goes wrong it is 'in a box' so to speak - we'd still have our other cards if God forbid we were robbed or lost it

                      Comment


                        #12
                        Originally posted by 1fifthavenue, birmingham View Post
                        We use the Halifax clarity abroad, and for that purpose only, meaning that if anything goes wrong it is 'in a box' so to speak - we'd still have our other cards if God forbid we were robbed or lost it
                        I second this. Halifax Clarity was a good card, and perfect to keep in a travel wallet.

                        Also, if you need to withdraw cash, you can do it on the Clarity card for free - you just pay a small amount of daily interest.

                        At one point we had a Post Office credit card, but the online banking (through Bank of Ireland) was appalling in terms of usability and security, and the customer service was awful.
                        Duncan S

                        See my blog!

                        Comment


                          #13
                          Originally posted by 1fifthavenue, birmingham View Post
                          We use the Halifax clarity abroad, and for that purpose only, meaning that if anything goes wrong it is 'in a box' so to speak - we'd still have our other cards if God forbid we were robbed or lost it
                          Same here, use it to pay pre-booked hotels, train tickets, pre-booked spa and excursions, on-board account and any must have purchases while in port. But we always take another "just in case" credit card, better safe than sorry.
                          Oriana
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                          Comment


                            #14
                            Anything to do with Foreign Travel goes on my Clarity Card and one further tip.

                            If you are asked whether you wish to be charged in Sterling or local currency..............Always Local Currency, never Sterling
                            Wilba

                            Comment


                              #15
                              Last week in Lisbon I drew out 100 euros from a cash machine using a Halifax Clarity card (which I had pre loaded to avoid any interest charges) £89.67 was the overall cost with no additional fees to pay. Not being currency rate savvy someone will be able to tell me if that is a reasonable rate. I would advise anyone who withdraws cash from an ATM machine abroad to pay in the foreign currency and NOT in GBP the ATM offered to do the exchange for me and the cost would have been £101.38 for 100 euros.

                              Comment


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