Five Questions About: Rewards credit cards

 

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The Independent Online

What are rewards credit cards?

Credit cards which offer rewards for spending in the form of cash, points to save money in stores or even Air Miles you can redeem against the cost of flights.

How popular are they?

Research from Sainsbury's Finance says 42.3 per cent of credit cards now offer a reward, compared to 27.4 per cent two years ago.

What is the best cashback credit card?

American Express offers five per cent cashback on purchases for the first three months on a spend of up to £2,000. The cashback rate then reverts to 1.25 per cent. However, there's a £25 annual fee on the card, in addition to a representative rate of 14 per cent (variable) on purchases if you don't clear your balance.

What is the best credit card for points?

Depending on where you shop, it could be better to earn points instead. The M&S card gives you a point for every £1 spent in store, and a point for each £2 spent elsewhere. Once you have 100 points, you'll get a £1 voucher to spend in store. The card also offers 0 per cent interest on purchases for the first 15 months, after which a representative APR of 15.9 per cent (variable) applies. Sainsbury's, Tesco and British Airways (through American Express) also offer rewards cards.

Are there any drawbacks?

According to Bank of England figures, the average representative APR on credit cards currently stands at a whopping 17.32 per cent – so if you don't clear your balance every month, the interest you pay will easily wipe out any benefit.

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