If you pay your credit card balance off at the end of each month then a cashback credit card could be the best type of card for you.
Cashback credit cards pay you back a percentage of the amount you spend on your card. The more you spend the more cashback you get. Some cashback cards have no upper limit on the amount of cash you can get back.
Most cashback credit cards offer a higher introductory rate of cashback in the first one to three months after you apply for the card so if you have plans to make a large purchase on your cashback credit card then do so shortly after you apply for the card.
The most important thing to watch out for when using a cashback credit card is that you do continue to pay off your card balance each month. The value of any cashback you earn from your spending will quickly be eclipsed by the cost of paying interest on your card debt.
Handle your cashback credit card right and it could add £100s of pounds a year to your income. You could use the card for normal spending and milk the cashback facility for free money. Do this by using the card instead of cheques, debit card payments and cash. Your cashback returns will quickly mount up.
NB: Always set up a direct debit when you apply for your cashback credit card so that you are 100% certain that your balance will be paid off in full each month. Check to see that your direct debit will be active in time to pay off your first monthly balance so you don't get caught out.
If your cashback credit card direct debit will not be active in time then make a payment by cheque, transfer or debit card. Again, make sure that your entire balance is paid off or the interest bill will wipe out any gains from the cashback.
For other ways to make your credit card pay you see our reward credit card comparison table. If you are about to do a load of new spending and you don't think you will be able to pay off your balance in full each month then don't take a cashback credit card get a new credit card instead. Our new credit card comparison table will help you find the best deal.
If you already have a cashback card with an existing balance on it and are struggling with paying it off, why not transfer it to a balance transfer credit card and pay 0% interest. See how much a balance transfer could save you.
