Will cashback on cards lead you into temptation?
It's the reward that most people look for but it works only if you can clear your debt each month. Emma Lunn surveys the best deals
Sunday 04 November 2007
Credit cards that offer users a percentage of the money they spend back in cash have taken over from 0 per cent deals as the marketing tool of the moment. But you'll lose more than you gain if you chase the rewards too hard.
According to research by Abbey, cashback is the feature that most people look for in a credit card. The bank says that one in five want to see a return on their spending, against 16 per cent who want plastic with a low annual percentage rate (APR).
It is probably not a coincidence that Abbey is the latest provider to throw its hat into this ring. New card customers with the bank will benefit from 5 per cent cashback on the first £1,000 of purchases from major supermarkets. However, the 5 per cent offer finishes at the end of January, and with Christmas approaching, it could be all too tempting to overspend.
"Generally, it's not a great idea to purchase food on credit, but anyone doing this should take advantage of the cashback while ensuring that they clear their balance each month," says Sean Gardner, chief executive of comparison site MoneyExpert.com.
Fail to pay off the bill and cardholders can find that any cashback gained is wiped out by interest payments, Mr Gardner adds.
Samantha Owens from financial analyst Moneyfacts reckons the Capital One World MasterCard is a good long-term bet for reward-hungry consumers. It offers 4 per cent cashback on purchases for the first three months and 1 per cent after that. The card has a typical APR of 15.9 per cent.
"Spending £1,000 over the three months will earn you £40 – not a bad return," adds Ms Owens.
Last week, American Express upped its cashback offer. New applicants will now get 5 per cent for the first three months, as opposed to 3 per cent previously. But this introductory rate is available on up to £4,000 of spending only. Should this threshold be reached in the initial three months, cashback will then be earned at 1 per cent.
After the introductory period is up, the card pays 0.5 per cent cashback on the first £3,500 a year, 1 per cent between £3,500 and £10,000 and 1.5 per cent above that.
Meanwhile, Yorkshire building society's Visa card offers 1 per cent on spending up to £2,000 a year and 0.5 per cent afterwards. It also features 0 per cent interest on purchases for six months.
If someone were to spend £20,000, spread evenly across the year, on the Capital One World MasterCard, they would net £350 in cashback in the first year and £200 in subsequent years. With Amex having increased its offer, a consumer spending the same amount on its card would scoop £410 cashback in year one, and £233 in following years. But Amex is accepted in fewer shops and restaurants than MasterCard.
Martin Lewis, founder of MoneySavingExpert.com, sounds a note of caution about getting carried away on credit cards: "Withdraw money and you'll often be charged a fee and heavy interest. The rule is simple: never use them at cashpoints." He adds: "It's no coincidence that many cashback cards have top balance-transfer offers; they want to tempt you both to spend on the plastic and shift debts to it."
Cash machine withdrawals are usually charged at a higher interest rate than purchases. Barclaycard's platinum card, for example, has a typical APR of 14.9 per cent on purchases but withdrawals are charged at 27.9 per cent – nearly twice the headline rate.
Bargain Hunter: Comparethemarket.com launches two-for-one cinema tickets offer
10 tips for taking out a personal loan
You'll need £220,000 for a minimum wage in your retirement
Pension freedom: Steve Webb answers your questions on the big shake-up
Bank-beating exchange rates on your international payments
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 2 JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
- 3 The West has it totally wrong on Lee Kuan Yew
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Jeremy Clarkson calls on trolls to leave producer Oisin Tymon alone: 'None of this is his fault'
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...
£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...
£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...
Day In a Page
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station