Best Cash Back Credit Card

What is a cash back credit card?
Cash back or cashback credit cards are a form of reward card but instead of the card company giving reward points for using the card the card company will offer a monetary amount for using the card. These can range in the % of monetary value and that is why we give a comparison here as to the different rates available from the different card companies and the best card for you.

The card company will give the card holder a % of their net expenditure (purchases minus refunds) which is either credited to the credit card or paid to the card holder direct. This payment is an annual payment. The typical rate can be between 0.5% and 2%, however recently some card companies have offered up to 5% return on a certain fixed period, for example the first 3 months.

The Golden Rule
Cash back cards are most beneficial to consumers who pay their credit card statement off every month as these cards can have higher APR’s but again we offer a comparison of this for you. The reason it is best to pay off the card at the end of every month is that if you do not the interest paid outweighs the benefit of getting the cash back amount at the end of the year.

Turning your cash back card into a debit card
The easiest way to make sure you are paying the balance of the card off in full every month is to setup a direct debit with the card company. Unlike a standing order, which enables the card company to take a fixed amount, a direct debit will allow the card company to take a variable amount which correlates to what you owe.

To do this use the card application forms to setup the direct debit payment and select the option to pay off in full when the direct debit is taken. Some card companies miss this last option out as they make more money if you don’t pay up in full. If this happens write “pay off in full” and send it in. The card company should honour this but it is worth checking with them that the option has been applied after the application is successful.

Once you have setup the direct debit your credit card has become a debit card but you get cash back rewards for using it. It is also wise to make sure you are not spending over the amount you can afford to pay off by direct debit each month as this also negates the savings gained on the cash back.