It's possible to earn 1% money back on all your spending, or even as much as 4% for an introductory period with cashback credit cards. Alternatively, some cards enable you to generate points which can be redeemed for rewards such as gifts, flights or holidays.
Cash back is a loyalty scheme that rewards customers when they use their credit card to make purchases. You will receive a cashback percentage of your purchase amount each time you use your card which is usually totalled up and paid to you as an annual lump sum.
If you pay your credit card balance off in full each month and pay nothing in interest charges, the advantage of using a cash back credit card is that everything you buy is a little cheaper as cashback is effectively a discount on all spending. For instance if you spend £400 a month on a card offering 1% money back you would earn a £48 reward each year.
However in order to really benefit from this type of reward scheme you need to pay off your card balance in full and on time each month or you'll risk paying interest and the charges will outweigh the loyalty rewards or cashback gain. The easiest way to ensure payments are made in full and on time is to set up your payment by direct debit.
Who offers the best cashback or credit card rewards?
Use the compare facility at the top of this page to see who offers the top rates for cashback.