card guide
Cash Back or Rewards – What’s Your Preference?

In their bid to retain customers credit card companies have resorted to many different marketing ploys, or ‘incentives’. Cashback cards have proved popular, as have cards offering rewards points. But which is better?


The interest on most cards offering cash back is accrued throughout the year and the totals shown on your monthly statement. The annual cashback is then allocated to your account once the twelve months are up.

One exception to this is the EGG card that gives you instant cash back if you visit different stores online such as Virgin wines and ASOS, the online gift and fashion store.

Inspecting the small print

Typical restrictions applied to the annual cashback cards are that it’s restricted to 2% of spend as an introductory offer. You need to look for what it then reduces to as it will go to a lower rate when the honeymoon is over. For example, 1% with the Morgan Stanley card. The American Express Platinum card goes as low as 0.5% on amounts up to £3,000, but fortunately increases to 1% on spend between £3,000 – £7,500 and 2% on spend in excess of £7,501.

So, that’s one card where the cashback is clearly designed to encourage you to spend, spend, spend!

Robbing Peter to pay Paul - the annual fee

Although there are less of them around these days it’s always worth remembering to check whether you cashback card charges you an annual fee. If it does, get rid of it. There is no point in giving the company money on the one hand only to receive some back on the other. You can do better.

Is it worth it?

An example of the value of a cashback card being reduced is the HSBC Platinum Visa card, which charges a £35 annual fee. The cashback vouchers are worth 44p for every £100 spent, so that means you would have to spend £8,000 to actually earn cashback in real terms.

No small change

Averaged out over the year that HSBC card spend would be only £666.67 each month. But if you put £1,000 on the card and pay it off each month so you don’t get charged interest, that would mean you have the grand sum of very roughly £17.50 cashback for the year’s spend.

You can see why the card companies are keen to use the cashback incentive.

So what about reward schemes?

Reward schemes usually offer points that can then be redeemed against goods, usually only from selected outlets.

The Goldfish card has proved to be one of Britain’s most popular credit cards, helped largely by a well targeted and conceived Television advertising campaign featuring Billy Connolly.

A million people can’t be wrong, can they?

There are over a million customers with Goldfish cards and every pound you spend online or in the high street with your golden friend will earn points that can be redeemed at popular shops such as John Lewis, Marks and Spencer, Asda, Dixons, Boots, and WH Smith and many, many more.

Come fly with me

Air Miles has proved a very popular incentive scheme and is offered by several different card providers, including the illustrious Coutts and Co. Air Miles credit gives one Air Miles point for every £20 spend and as much as one point for every £5 spent at a participating Air Miles Travel Agency. So they can mount up.

I’m Morgan Stanley fly me

Morgan Stanley are an investment Bank, so if you are a high earning individual or couple, then you could benefit from the travel and holiday offers associated with one of their cards. Collect points on your card and if you spend £25,000 you will have earned enough points to fly from London to New York return.

General Motors

The GM card gives users rebate points at 3% of spend towards money off a new Vauxhall or Saab car. They even offer 100 free rebate points for the first time you use your card and that provides you with the instant equivalent of £100 off that shiny new motor!

Which type of card?

As with all these decisions it really comes down to how you use your card and your own particular lifestyle as to which one you should choose. Bear in mind that card reward schemes in general have been heavily criticised by Which? magazine in the past because they don’t offer very good value for money.

The choice is yours

In general cashback schemes offer more flexibility for the consumer to buy what they want, but if you have a particular lifestyle then you may well see a credit card provider with a particular offer to suit that lifestyle, like the GM card or the Suite card which offers points redeemable at over 16,000 hotels around the world.

Ultimately, the choice is yours.

Posted on: [ November 03, 2017 ]       Add to   Digg it   Add to Blinklist   Add to FUrl   StumbleUpon