The best cashback credit cards

Cash back credit cards are a great way to get a small return every time you spend. They basically pay a percentage for each transaction.

While some credit cards reward spending with points that can be redeemed for flights, hotels, and all kinds of exclusive offers, cash back cards may be more attractive to some shoppers because their function and purpose are simple.

Cash back credit cards typically pay between 0.25 percent and 1.25 percent on each purchase, depending on the card you choose and how much you spend.

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

Although the winnings may seem small, the cashback over time can amount to a significant amount. For example, if you were to spend £12,000 over the course of a year and earn 1 per cent on all spending, that equates to £120.

Some cash back credit cards come with generous introductory offers which means you can sometimes earn more cash back for a period of time.

However, as with all credit cards, it’s important to be aware of any fees that may eat into your returns, while also making sure to pay off the card in full each month to avoid being charged interest.

Rachel Springall, financial expert at Moneyfacts, says: “Cashback offers are a great way for consumers to make a little cash when they shop or even when their bills come out.

Consumers could consider a cashback offer as the cost of living rises, but they must make sure their credit card is paid off each month and their checking account remains in credit — or any cashback they earn could be wiped out through interest charges.

“There are usually some eligibility criteria to meet in order to get cash back, so it is worth taking the time to check the terms and conditions to get the most out of any offer.”

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

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

Every year after that, you’ll earn 0.5 per cent cashback on spending up to £10,000 and 1 per cent cashback on everything you spend thereafter.

As long as you spend at least £3,000 each year, every full £1 you spend on purchases is eligible for cashback.

There are absolutely no monthly or annual fees to worry about.

For someone who spends £1,000 per month for the first year, they will earn £155 cashback subject to the introductory offer.

It is also worth noting that you can sign up for a range of exclusive offers and discounts from various retail and travel partners. These will usually be available for a limited period of time.

What to watch out for: If you fail to pay your bill each month, you will earn 25.7% APR.

Additionally, some UK retailers do not accept Amex due to the fact that it charges them around 3 percent for every sale they make.

It’s important to be aware of where you can and can’t use your American Express card – you can find out where Amex is accepted here.

There are now very few major chains that don’t accept this, but you are more likely to have a problem with smaller shops across the UK.

However, some notable organizations still do not accept Amex including Tile Giant, Dunelm, and Sky.

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

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

Like the ‘everyday’ card shown above, it offers 5 per cent cash back for the first three months – but with a cap of £125.

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

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

If you fail to pay it off each month, you will receive 31 percent of the annual interest rate.

This card is pretty much a jack of all trades and a master at nothing. In fact, it almost matches the two Amex cards exactly in terms of its versatility.

This is because it’s not just a cash back card, it’s a balance transfer card and an external card.

It’s offering 0.5 percent cash back on all spends as standard, but it’s currently offering customers the chance to earn 1 percent cash back when using the card abroad until September 18 this year.

However, it should be noted that you need to spend at least £500 to be eligible and purchases must be made in the local currency.

Another cashback benefit is Retailer Deals, a free service that allows you to earn up to 15 percent cashback from a variety of major retailers.

Once the retailer’s offers are on, you’ll be able to choose the offers and earn cash back when you use the card at those stores or online.

However, while this credit card is by no means the most profitable cash back card on offer, it does come with a couple of other benefits.

Provides 0 percent interest on balance transfer for 26 months with no balance transfer fee.

Balance transfer cards have long provided a way to reduce exorbitant interest payments by transferring debt from your existing credit card to a new one, often with the promise of 0 percent interest for a set period of time.

Santander’s offering is among the best in this category alone – especially because it doesn’t charge any fees for transfers.

It also does not charge any foreign exchange fees for overseas spending and cash withdrawals made abroad in local currency.

What to watch out for: Unfortunately there is a monthly fee of £3. This works out to £36 each year.

A cash transaction fee will be charged on all cash withdrawals, and interest will be charged on the cash you withdraw from the day it is withdrawn.

Make sure to pay off your balance each month or you’ll get 24.7% APR.

What’s there to like: These two credit cards allow 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 opening the account.

This means that someone who spends £1,000 per month for the first 12 months can earn a total of £70 in cashback.

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

There are also no monthly or annual fees to worry about with this card.

What to watch out for: there nNothing major to worry about, other than making sure you pay it off every month to avoid being stung by 19.9 percent.

With this card, you get 0.25% cashback on all your everyday spends, plus no transaction fees when you’re abroad.

Although the cashback is minimal, the card is worth mentioning for its external cost-saving benefits.

You will be able to withdraw cash from ATMs or purchase your souvenirs without any fees. The card also comes with no annual or monthly fees.

Barclays also gives access to retailer offers that allow you to earn up to 15 percent 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 hitting the 23.9% APR.