How to get cash back when you spend

Credit cards that offer cashback pay shoppers when they spend on their plastic
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Credit cards that offer cashback pay shoppers when they spend on their plastic, though typically the rebates earned are only 0.5 per cent of the cost of purchases — 50p for every £100 spent. However, Halifax’s new cashback card unusually offers a full one per cent on supermarket and petrol purchases, with 0.5 per cent on other spending.

At a time of higher food prices and tight household budgets, the card offers an easy way to, in effect, get a small discount on the cost of everyday essentials.

To qualify for the one per cent rebate, spending has to be at specific retailers, but these include most of the major grocery chains (Tesco, Sainsbury’s, Waitrose and others) and petrol stations (BP, Shell, Texaco and more).

Cardholders are limited to £150 of cashback a year but to get this you’ll have to spend £1,250 on food and fuel purchases every month. The card has no annual fee and an interest rate of 15.9 to 21.9 per cent, set at the outset. But if you are going to pay interest, you would be better off using a card that offers an initial interest rate of zero per cent.

More rewards

Halifax’s cashback credit card can be used at the same time as points-style loyalty cards to earn extra rewards — what the industry calls “double dipping”. Combined with, say, Tesco’s Clubcard, which gives £1 in shopping vouchers for every £100 spent at the supermarket, the total rewards doubles to two per cent.

There are also other credit cards offering higher rewards for purchases from individual retailers, so it is worth considering different cards for different spending. For example, the Shell Mastercard gives a three per cent “fuel rebate” for petrol bought at Shell stations using its card. Rebates are redeemed as discounts on future purchases of Shell fuel.

Free money

Cashback cards that offer higher-rate cashback deals are rightly popular for giving “free money” to those, for example, who pay off their bills in full each month. Some card holders can receive hundreds of pounds in cashback every year this way.

The rebates on the higher-payout cards are generally worth more than the value of points earned on other reward credit cards. And unlike points-based cards, cashback can be spent on anything.

American Express’s Platinum card pays the top cashback rate of five per cent — that’s £5 for each £100 spent — though only for the first three months and only on £2,000 of spending (so you can only earn a maximum of £100 in cashback). After that it pays between 0.5 and 1.5 per cent, depending on your annual spend.

However, be warned: some businesses — particularly small retailers and restaurants — do not accept payments by American Express, so have an alternative card available.

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