Meet the credit card that can cut the cost of your Christmas spree

Cashback deals could save you money, if you are smart. Nargis Ahmad and Julian Knight report

You probably don't need telling that Christmas is an expensive time of year. The average Briton spends £604 on Christmas, according to Birmingham Midshires. And judging by the surge in calls to debt charities in the New Year, many people spend far more than that, much of it racked up on newly acquired credit cards. However, if you opt to use the new generation of cashback credit cards, you can at least cushion some of the financial pain of the festive period.

A cashback credit card works like this: every time you shop using your flexible friend, you will earn money back. It's much like a supermarket loyalty card, but instead of earning rewards or points you earn good old fashioned money.

For those who keep on top of their credit card payments, it's possible to earn some extra cash while doing your shopping, says Clare Francis, spokeswoman for price comparison service

"If you do clear your balance in full, and around half of all people do, it's a good way to make a bit of extra money. No wonder, cashback appeals to a lot of consumers. People will be going out Christmas shopping and they will be pushing their credit cards more, so why not reap some benefits from something you do anyway."

The cards come with a number of other perks apart from the cash, such as collecting Airmiles or reward points for the Nectar loyalty scheme. But Ms Francis warns that shoppers should remember that these cashback cards can still have a nasty sting in the tail: "The key with any cashback card is that they only make sense if you pay off the balance in full at the end of each month. Take the American Express Platinum Card for example. It pays 5 per cent cashback, but if you don't pay the debt off in full at the end of the month, the interest rate is 18.9 per cent, which in no time at all can work out to be much more expensive than the value of the cashback."

So how do you make the most out of cashback credit cards this Christmas? The first step is to think ahead. If you're keen on one then remember that it can take up to four weeks to process a new application. Credit card firms are taking extra care over who they hand their cards out to. Put simply, have a low credit score and it's more unlikely than ever that you will be able to get one. Things that can negatively impact your credit score include failing to keep up loan and other credit repayments, getting behind with your utility bills and not being on the electoral register.

Certain cards offer a higher rate of cashback but for a limited period, for example, the American Express Platinum card has a high rate of 5 per cent on the first £4,000 you spend in the first three months of the life of the card. So timing when you get your card during a period of high spending, such as Christmas and the January sales, will help to maximise cashback.

If you want a cashback card, it may be worthwhile checking out one of the cashback websites. Sites such as Topcashback, Quidco and Greasypalm will give you money if you sign up to a cashback card through their websites. You could pocket £34 for the American Express Platinum card or £20 for the Egg Money card if you go through, says Mike Tomkins, co-founder of the website. "You get two lots of cashback on purchases, one from the credit card and another cashback amount by shopping via a site such as ours. Shop as you would do, but you get a discount, this is free money."

However, cashback websites do have their critics. Some suggest that choice is far more limited than on the high street and the items that you want to purchase may be had for less money through seasonal retail sales or ordinary online retailers. But according to Mr Tomkins, signing up to a cashback card through a cashback website is proving popular: "People are getting the credit cards out in the run up to Christmas to do the shopping. People are definitely going for the cashback; more than double the applications are going for the cashback cards as opposed to those which don't pay anything. People are looking to save money wherever they can."

Plugging into the more austere money saving times, Abbey launched its new Essentials cashback card last week. It offers 3 per cent cash back on supermarket and petrol purchases at selected outlets for the first six months. Cashback is capped at £75 during the first six months of the card or £12.50 a month.

Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas