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How to use a cash back credit cards at christmas

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Christmas is an expensive time of the year. With so much to buy and organise, the cost can soon start to really add up. If you’re looking to save money and get a little something back, a cash back credit cards could be just what you need. Instead of getting a discount on the things you buy, you’ll get cash paid back to you.

How cash back credit cards work

Once you receive your cash back credit card, you’re only task is to start spending. Everything that you spend will increase the amount of cash you earn back. The money you do earn back is paid into your account once a year. Popular site uSwitch has estimated that consumers who spend around £1000 a month will receive £198.75 in the year. This is based on a 0.5% rate. As you can see from that, it isn’t a huge amount of money to get back, but it’s definitely better than nothing.

Finding a good card

There are two things you need to consider when looking for a cash back credit card. These include:

  • Rates
  • Spending habits

The rates of the card are important and will also depend on your own credit rating. There are two rates to be aware of and they include cash back and the interest rate. It is still a credit card after all, so there will be an annual interest rate associated with the card. You want to look out for one that has a low APR and a high cash back rate. Different cards suit different spending habits. For example, the Capital One Aspire World MasterCard offers a rate of 5% for the initial three months. After that the rate will drop to 0.5% on purchases up to a value of £5,999. The rate slightly increases to 1% up to £10,000 and to a further 1.25% if you spend more than that. This type of offer is suitable for those who spend little and often on their card.

If you plan on making larger purchases, the Barclaycard Cash back credit card would be a better option. It pays a higher cash back rate on the top five most expensive purchases on your bill. The initial six month introductory offer is a fantastic 6%. It then drops to 2%. All other purchases on the card get you a cash back rate of 0.5%. There is an annual fee of £24 for this card so that’s something else you need to consider.

Fee’s

Many cash back credit cards have an annual fee. The general rule is the higher the rewards, the more the annual fee will be. You should always compare your options and not just choose the first card that you find.

The main thing to remember is not to let the card tempt you into spending more than you can afford. By paying off the balance IN FULL at the end of each month, you will avoid paying any interest and reap all the benefits of the cash back. As you’re getting money back, it can be tempting to buy lots of things you wouldn’t normally buy, but fail to pay it off and the interest you’ll pay will soon far outweigh any cash back you’ve earned .  So be sensible with the card this Christmas and focus on using it for either presents or food.

 

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One Response to “How to use a cash back credit cards at christmas”

  1. Corinne Faulkner

    Really interesting I’ll definitely be taking notice thank you

    Reply

About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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