Everyone loves a good discount, getting the most out of a cheap sale, clubcard points or receiving freebies. But let’s be honest, when it comes to perks, nothing beats having cold, hard, tax-free cash back in your hand. It’s fluid, it’s flexible, and you can spend it on whatever you wish. And the great news is that the more competitive the world of supermarkets and household goods stores get, the more companies are choosing to offer cashback as a reward scheme.
So how best to exploit this? It turns out that credit cards are increasingly the best way to go. This form of plastic is often frowned upon, or seen as a risk for those that aren’t capable of spending within their means. It may be true in some cases, but in today’s world, credit cards are a must. For starters, using – and paying off – your credit card is an easy way to boost your credit score, as it demonstrates your ability to pay off debt to lenders.
And now, with cashback schemes becoming the norm, credit cards really are becoming more attractive.
The best offers out there
One of the more striking deals at the moment is with Amex, who are offering 5% cashback on spending in the first three months of using their Platinum Everyday card (provided you spend at least £2,000 in the first three months). Thereafter, you’re entitled to 1.25% cashback, which is still handy given that there aren’t any fees for using it. You will need to spend at least £3,000 a year in order to benefit, but if you’ve got some big things to buy over the next few months, it’s worth looking into.
If supermarkets, department stores and petrol make up the bulk of your spend, the Santander 123 Card may be a good way to go, as you’ll get 1% cashback at all major supermarkets, 2% at all major department stores, and a very enticing 3% from all major petrol, National Rail and TFL purchases. The catch is that there is a fee of £36 a year, but there is potential for cashback well into the hundreds of pounds if used effectively.
There are some other deals worth considering too like the Barclaycard Freedom Rewards Card, the Tesco Bank Clubcard, the Nationwide Select card, and the Asda Money credit card. However, for those with limited credit history, the Aqua Reward offers you a rare chance at not only being approved for a credit card, but also receiving 0.5% cashback when using it.
Being sensible, and getting the most bang for your buck
These cashback offers are all very enticing, but there is a crucial proviso to bear in mind when using them… you MUST pay them off at the end of each month! Remember, the reason credit card companies are offering such perks is because they want you to spend lots of money so that you end up having to pay them interest on outstanding balances, and even penalties for breaching your limit. And with representative APRs typically well north of 22%, you can really get stung.
But don’t fall foul to the temptation. Often the best way to go is to simply set up a direct debit to clear the full amount each month. Otherwise if things have got away from you already, and you’re struggling to clear the balance, it might even be worth looking into a debt consolidation loan, as the interest you’ll pay on a personal loan such as this is likely to be far less than you would on credit card debt.
It need not scare you away from taking advantage of the various cashback options. All it means is that you’ll need to be disciplined, and strike the balance between making the most of these offers, and still spending within your means. That way you’ll end up with more money in your pocket to boost your family budget, and without any worries of escalating credit card debt.
How are you using credit cards? Do you earn cash back with them, use them for emergencies and do you pay them off immediately?
This is a promotional post with images from Frankie Leon and Got Credit via Flickr.