Money Insider: Cashback offers are back ...but are they worth it?
Friday 27 September 2013
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.
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.
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
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 AirAsia flight QZ8501 missing: Plane carrying 162 passengers from Indonesia to Singapore disappears over Java Sea
- 5 Naomi Wolf reacts to Isis 'conspiracy theories' critism after she questions whether beheading videos are real
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Millions of Britons struggling to feed themselves and facing malnourishment
Immigrants make UK racist, says Ukip councillor Trevor Shonk
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
Day In a Page
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 deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
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
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens