Money Insider: Cashback offers are back ...but are they worth it?

 

Desperate to boost market share, credit-card companies and banks are once again trying to win us over with headline-grabbing cashback incentives.

The economy may be slowly starting to recover, but for many people money is still tight, so dangling the carrot of "free cash" is a smart marketing ploy from the banks.

The problem is that these deals may look quite appealing at first glance, but when you dig a bit deeper and manage to make sense of some of the small print and restrictions they're often not all they're cracked up to be.

Credit cards

When it comes to new plastic, many of the promotions try to tempt you with impressive-looking returns for the first three months, but once the reward rate plummets they lose their appeal, particularly if you're not a big spender.

For example, to take full advantage of the rewards on offer from Barclaycard and its High 5 cashback deal you need to use your card at least 15 times a month to get the highest cashback rate, and even then it's only paid on your five biggest purchases.

The Santander 123 card cashback scheme operates in a totally different manner in that you earn at varying reward rates depending on where you spend. The percentages look pretty impressive, but remember there will be some big-ticket items that don't fall into any of the predefined categories, so you'll miss out on some big earning opportunities.

The number one rule with credit card cashback offers is: don't even think about signing up unless you repay your statement balance in full every month, otherwise the interest charges will more than wipe out any benefits earned.

Also remember that cashback is only payable on purchases, so balance transfers, cash advances and gambling transactions don't count.

Also bear in mind that some reward cards charge £24 a year, so if you're not a big spender this will make a big hole in your payback.

We all have different shopping habits, so make sure you pick the card that works best for you based on the retailers where you tend to spend the most at over the course of a year.

Bank accounts

Now that it's possible to switch bank accounts in just seven working days, the banks are upping the ante to try to keep existing customers and entice new ones to sign up. In the past month, both NatWest and Halifax have announced new cashback programmes for current account customers.

However, I wouldn't get too excited as the number of retailers included in these schemes is quite limited and unless this changes you're unlikely to earn much in the way of a rebate.

The most popular current account cashback offer comes from Santander with its 123 offer. It's a unique but potentially rewarding scheme where you can earn cashback on your utility bill payments as well as interest on credit balances over £1,000.

Even though the account comes with a £24 annual fee, it's fairly easy to recoup this and more. There's a calculator on the Santander website where you can check how much you would earn based on your bill payments.

The Halifax reward current account is a long-standing offer and pays £5 every month as long as you remain in credit and pay in a minimum of £750 a month – again a nice little earner, pocketing you a handy £60 a year for your loyalty.

Although there's extra cash to be earned from these deals, the returns won't be life-changing. But they could come in handy at Christmas, for example, or perhaps used towards a once-a-year treat.

Andrew Hagger is an independent personal finance analyst at moneycomms.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
News
David Ryall in Harry Potter
people
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
PROMOTED VIDEO
Sport
Wayne Rooney warms up ahead of the English Premier League football match between Tottenham Hotspur and Manchester United at White Hart Lane
football
Arts and Entertainment
Peter Mayhew as Chewbacca alongside Harrison Ford's Han Solo in 'Star Wars'
film
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
filmIdris Elba responds to James Bond rumours on Twitter
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
Arts and Entertainment
Lena Headey as Cersei Lannister in Game of Thrones
film
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

    Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

    Selby Jennings: Quantitative Research | Equity | New York

    Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

    Selby Jennings: SVP Model Validation

    Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    Day In a Page

    War with Isis: The West needs more than a White Knight

    The West needs more than a White Knight

    Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
    Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

    'The day I was shot by the Taliban'

    Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
    Revealed: the best and worst airlines for delays

    Revealed: the best and worst airlines for delays

    Many flyers are failing to claim compensation to which they are entitled, a new survey has found
    The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

    The stories that defined 2014

    From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
    Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

    Disaster looming? Now you know where to head...

    Which British city has become the first to be awarded special 'resilience' status by the UN?
    Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

    Finally, a diet that works

    Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
    Say it with... lyrics: The power of song was never greater, according to our internet searches

    Say it with... lyrics

    The power of song was never greater, according to our internet searches
    Professor Danielle George: On a mission to bring back the art of 'thinkering'

    The joys of 'thinkering'

    Professor Danielle George on why we have to nurture tomorrow's scientists today
    Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

    Monique Roffey interview

    The author on father figures, the nation's narcissism and New Year reflections
    Introducing my anti-heroes of 2014

    Introducing my anti-heroes of 2014

    Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
    DJ Taylor: Good taste? It's all a matter of timing...

    Good taste? It's all a matter of timing...

    It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
    Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

    How we met

    Olivia Jacobs and Ben Caplan
    Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

    Bill Granger's healthy breakfasts

    Our chef's healthy recipes are perfect if you've overindulged during the festive season
    Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

    Who does your club need in the transfer window?

    Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
    The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

    Michael Calvin's Last Word

    From aliens at FA to yak’s milk in the Tour, here’s to 2015