Cashback Credit Card
What are Cashback credit cards?
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It's easy to see why Cashback credit cards are one of the most popular types of plastic. The deal is simple: every time you spend money you get a percentage of that money back. Normal rates are around 0.5 and 0.75 percent, so for every hundred pounds spent you get between fifty pence and a pound. It works an additional incentive to attract customers and allows you to accrue money whilst spending. However, it is worth approaching Cashback credit cards with a healthy degree of scepticism, as in reality you're probably only talking about pence (rather than pounds) every time you pay for something on your card. In short: they aren't going to make you rich, but every little helps.
It's a good idea to read the small print on all Cashback deals. Cashback credit cards promise you money every time you spend. Look closer and you may well find a number of caveats and conditions. For Example: American Express promises you 2% (but after three months it drops down to 1%), similarly the Bank of Ireland offers 1% (but only once you have borrowed over £3000) and Egg gives up to 10% Cashback (but only at selected retailers). Overall the complexity of offers and different options available can be confusing for customers; so take time to find out what the exact figures amount to.
Another factor worth considering is that good Cashback credit cards are not necessarily value for money in other areas. You might end up paying a higher APR or more money on balance transfers. Credit card companies are in the business of making money, not giving it away, so you can be sure that they have worked out how they will make their money back in other ways. A good example is American Express , who trade an attractive Cashback deal for one of the highest APRs around.
All in all Cashback credit cards are not necessarily the route to riches that they might initially appear. The most important features of a credit card are the APR and balance transfer rates, rather than any relatively small sums that returned to you. As an additional incentive on an already good card it might be worth considering, but as a feature in itself it's unlikely to add up to much (especially if the card has a high APR).
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