A reward credit card can let you earn cashback or other rewards when you spend. We list our pick of the best reward credit cards to help you decide if one is right for you.
To help you pick the best deal for you, in this article, we outline:
Read more: Best credit cards to use abroad
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Explainer: 5 things you need to know about sustainable spending
What are reward credit cards?
Reward credit cards work like normal credit cards but hand out bonuses such as:
- Cashback
- Store points that can be turned into vouchers
- Discounts at various shops
- Airline points to get cheaper flights
If used carefully, reward cards can be a great way to earn bonuses.
But users have to be careful. You need to pay the card balances off in full every month. Otherwise, interest will be charged and can quickly cost you more than the benefits offered by the card.
Some cards require a minimum spend to get the rewards in the first place. This means it is essential to check all the details around the card to make the most out of it.
It is crucial to check eligibility requirements before applying. That’s because credit card applications can affect your credit score. Having a poor credit score can have a knock-on effect when applying for loans such as a mortgage.
Lots of credit card providers offer so-called soft credit checks. These can be used by potential borrowers before they apply for a card, to see if they will be accepted.
A soft check will not have an impact on someone’s credit history.
Read more: Best balance transfer credit cards
Rewards cards not for you?
That’s okay, these cards aren’t meant to be for everyone. Plus, it’s best you look at all your options first before deciding to apply with one lender.
A great way to start your research is to use our free eligibility checker, which is powered by Creditec. Using whole of market data, it takes your basic information and credit history to find the best cards available for you.
What is the best way to use a reward card?
If you are a borrower, it’s important to set up a direct debit so you have the automatic discipline of repaying the amount spent in full each month. This way, you can ensure that they never incur interest charges.
It is also important not to borrow or withdraw cash on credit cards as there are likely to be high fees, with interest that is usually charged straight away.
Anyone borrowing money on plastic would likely be better off with a 0% balance-transfer or 0% purchases credit card with low fees, or a standard card with lower interest rates – or even asking a bank about overdraft deals.
A reward card can be used for all normal spending to earn the bonuses. It can then be paid off in full each month. With energy bills at record highs, using a reward credit card to pay them could be a way of getting something back.
If you are taking out an American Express card, be aware that they are not accepted at all businesses and online retailers. One way around this is to add a credit card to a PayPal account and pay with that, but you would lose your Section 75 protection rights. However, PayPal does have its own buyer protection in place.
Read more: Best 0% credit cards
What is the best credit card for rewards?
We’ve ranked the best cards below using a combination of factors. These include the amount of ongoing points you earn, any introductory bonuses the cards give for hitting a certain spend threshold and any annual fees you might have to pay.
Some of the cards below are free for a year before a hefty fee kicks in, so it’s worth planning ahead and cancelling them if you don’t want to pay.
Many of the cards below are American Express (Amex) cards, which tend to offer some of the best introductory bonuses on the market.
However, if you’ve had an Amex card in the last two years, you won’t be eligible for any introductory bonuses. Additionally, Amex cards aren’t as widely accepted as other types of card. It’s worth bearing this in mind when selecting a reward credit card to use for your normal spending.
All reward credit cards should only ever be used for spending you’d do anyway. Additionally, make sure you pay off the balance in full each month to avoid paying interest, which may wipe out any gains you’ve made.
Read more: Which American Express card is right for you?
It gives 20,000 points when you spend £3,000 or more in the first three months of membership. You can swap these for vouchers, air miles or Nectar points.
To get the latter, you will first need to swap your Amex points for Avios, which you can do at the British Airways Executive Club website (you’ll need to sign up if you don’t have an account). You’ll then need to connect your British Airways Executive Club account to your Nectar account, which you can do at the BA website.
This card also now comes with a priority pass for airport lounges, offering four free visits a year at 1,300 airports around the world.
This card is free for the first year but then charges an annual fee of £195, so consider cancelling it before it kicks in. It also charges 31% purchase rate if not repaid in full each month.
This card comes with an 88.8% APR.
Additionally, spend £2,000 in the first three months and you will earn 20,000 bonus Nectar points, worth £100. Nectar points are worth half a pence each.
If you’ve had an Amex card in the last two years you won’t be eligible for the introductory bonus offer, so it’s worth looking at the Nectar credit card below.
This card is free for the first year but charges an annual fee of £30 after this, so remember to cancel before this if you don’t want to continue using it.
If the balance isn’t repaid in full each month, this card charges 31% purchase rate.
The card gives two points for every £1 spent at M&S for the first year. This drops to one point per £1 spent in M&S in year two and beyond. You’ll earn one point for every £5 spent elsewhere.
Each point is worth 1p in M&S vouchers.
Should I upgrade to Club Rewards?
Being a member of Club Rewards gives you an extra two points per each £1 spent at M&S, on top of the points you already get with this card. You’ll also get:
– At least £65 in vouchers to spend on clothing or home goods
– 32 hot-drink vouchers
– A voucher on your birthday
– Next-day delivery at no extra cost when ordering from M&S online
However, given the £10 monthly fee, it’s only worth joining Club Rewards if you’re a big spender at M&S. If you exclusively shop there and spend around £200 each month, it’s likely to be worthwhile.
The best reward credit cards for cashback
Credit cards that reward you with cashback are not as common or as generous as they used to be. But if you prefer cash in your account over vouchers or supermarket points, there are still a few options left on the market that are worth considering.
There is also a very attractive introductory offer. For the first three months, users of the card get 5% cashback and can earn a maximum of £125.
However, if you fail to spend at least £3,000 in a year then you won’t get any cashback at all.
The card comes with a 31% APR.
It’s not a credit card, so you will need to apply for it like any other bank account, but you also won’t face a hard credit check when you do. Instead, Chase carries out a soft credit check, which isn’t shown to lenders and therefore won’t affect your ability to get credit in the future.
While there’s no fancy introductory bonus like those offered by American Express, Chase pays the highest ongoing rate of cashback of any fee-free card, even though it’s only for a year. This makes it a great, no-frills option to do the bulk of your spending with.
Chase’s debit card is also more widely accepted than American Express cards, making it a more reliable source of cashback. The current account also comes with an easy-access savings account paying 4.1% AER monthly, another nice bonus.
It does have an annual fee of £25. But the card pays out 0.75% up to £10,000 – so a maximum £75, with the extra cashback compared to Everyday cancelling out the fee. It then pays a higher rate of 1.25% on any spend above that amount.
The card also has a similar introductory offer to the Everyday card – 5% cashback for the first three months. But users can earn a slightly higher amount: up to £125.
For anyone who already has an American Express card, the introductory offers on both of the products above are not available.
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