Playing your credit cards to get something for nothing

Cashbacks, cut-price petrol and free flights can all be yours when you flash the plastic at the shops. Chiara Cavaglieri tells you how to benefit

Credit card firms have long been in a war to win over customers by offering bigger and better rewards. Whether you want cashback on your shopping, cheaper petrol, or even air miles for that long-awaited summer holiday, a savvy spender with a decent credit rating really can get something for nothing.

Of all the credit cards available in the UK, a total of 39 per cent come with some form of reward – although only the most creditworthy customers are accepted. Providers are increasingly innovative with their rewards, so getting the most out of a card can be complicated.

"Santander 123 pays varying amounts depending where you spend, MBNA More Rewards comes with an Amex and Visa card on the same account so you can maximise your earning power, and Barclaycard pays enhanced cashback on your five biggest purchases each month," says Andrew Hagger of Moneycomms.

Many reward schemes are tied to specific retailers, so the first thing to consider is how and where you are most likely to use it. If you don't actually use your card in the right place, it could be a waste of time.

If you aren't happy to limit the reward to individual stores, a pure cashback card could be the best option. The American Express Platinum Cashback card is best buy, offering a generous 5 per cent for the first three months (on up to £2,000) and 1.25 per cent on spending thereafter. If you spend over £10,000 in a year you earn an unlimited 2.5 per cent cashback in your anniversary month. There is an annual fee of £25, but it still comes up trumps when compared to the classic credit card from Smile, which pays just 0.25 per cent cashback. Mr Hagger calculates that if you spent £25,000 over 12 months you would earn £62.50 with Smile and an impressive £312.50 with the Amex card at its 1.25 per cent.

Cashback and reward cards do have far higher APRs (in excess of 17 per cent) than other cards. This means the value of any rewards or points can easily be negated by the interest charges, and if you don't pay off the balance in full each month you'll get stung. Set up a direct debit payment to be safe, and if you aren't confident you can do this you generally need to avoid reward credit cards altogether.

Two new credit cards from Sainsbury's are something of an exception as they offer both low interest rates and decent reward schemes. The Sainsbury's Low Rate Nectar Credit Card and the Sainsbury's Low Rate Cashback Credit Card are both fee-free and charge just 7.8 per cent APR – the lowest standard rate on the market – for purchases and balance transfers.

These cards could work well if you wanted to pay off debt at your own pace, without having to transfer the balance from one provider to another and while still benefiting from the perks of being a loyal Sains- bury's customer.

The Cashback Credit Card offers 5 per cent cashback on purchases made in-store for the first three months, plus £5 cashback a month if you spend at least £250 in Sainsbury's and a further £250 elsewhere. Similarly, the Nectar Credit Card enables customers to collect up to five times the number of Nectar points they would normally earn on their Sainsbury's shopping for three months, and once the introductory offer ends the ongoing reward is worth 4 points per £1 spent, with additional Nectar points for using the card at Sainsbury's petrol stations.

"As far as rewards cards go, the Nectar Credit Card is one of the best out there. Getting the equivalent of 4 per cent cashback on fuel in Nectar points will be especially helpful to cash-strapped consumers," says Sarah Robb from uSwitch.com.

Ultimately every credit card offers something different, so take the time to decide which rewards suit you best. If you're a big online fan, you may want a card that gives money off purchases in your favourite store such as the Amazon Credit Card. This offers a £5 Amazon gift certificate straight off as well as three loyalty points for every £1 spent on the card in the first 90 days, falling to one loyalty point for every £1 spent, or two points per £1 spent at Amazon.

Understanding the best ways to boost any potential rewards is also crucial. The Tesco Clubcard Credit Card, for example, gives one Clubcard point for every £4 spent on it. One point is worth only 1p used in-store at Tesco, but worth up to 4p if redeemed for Tesco Clubcard Rewards vouchers instead. Similarly,the British Airways Amex card pays one Avios point for each £1 you spend. Each mile is worth a paltry 0.68p. But you do get a sign-up bonus of 9,000 Avios points when you spend £1,000 in the first three months, and if you're spending £20,000 over the year you get one free "companion ticket" when booking a flight.

All these card providers are determined to keep all their rewards for their own customers, but one company is finally bucking the trend. This week Barclaycard launched a new personalised shopping service, Bespoke Offers.

You don't need to be one of their customers to save on everyday purchases. Barclaycard is using its insight into shopping and sales trends to tailor deals to actual spending. They have a head start with their own customers, but in due course will have offers based on the location and shopping habits of other users. Retailers are happy to give discounts, as they can focus on people most likely to buy their goods.

"This is as close as you can get to one-stop shopping," says Valerie Soranno-Keating, CEO of Barclaycard. "And once we get to know you we can start making recommendations, cut through all the clutter and make it easy for you to find something you really want."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Recruitment Genius: Experienced Financial Advisers and Paraplanners

    Negotiable: Recruitment Genius: This extremely successful and well-established...

    Guru Careers: FX Trader / Risk Manager

    Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

    Guru Careers: Investment Writer / Stock Picker

    Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

    Day In a Page

    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map
    Lionel, Patti, Burt and The Who rock Glasto

    Lionel, Patti, Burt and The Who rock Glasto

    This was the year of 24-carat Golden Oldies
    Paris Fashion Week

    Paris Fashion Week

    Thom Browne's scarecrows offer a rare beacon in commercial offerings
    A year of the caliphate:

    Isis, a year of the caliphate

    Who can defeat the so-called 'Islamic State' – and how?
    Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

    Marks and Spencer

    Can a new team of designers put the spark back into the high-street brand?
    'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

    'We haven't invaded France'

    Italy's Prime Minister 'reclaims' Europe's highest peak
    Isis in Kobani: Why we ignore the worst of the massacres

    Why do we ignore the worst of the massacres?

    The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
    7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

    Remembering 7/7 ten years on

    Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
    Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

    They’re here to help

    We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
    Time to lay these myths about the Deep South to rest

    Time to lay these myths about the Deep South to rest

    'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
    What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

    What exactly does 'one' mean?

    Court of Appeal passes judgement on thorny mathematical issue