Cash Back Credit Cards

Top Cashback Credit Cards in the UK

The double whammy of a slow down in spending caused by the recession and rising bad debts is hitting credit card companies hard.

And this impats consumers too as card companies look to maintain profitability. Rates and fees are increasing, spending limits lowered, applications for cards and limit increases rejected and 0% interest balance transfer deals are becoming history. Indeed many card companies are now charging transfer fees to those switching accounts.

Consequently it is getting harder to get something for nothing out of the credit card companies.

Cashback cards, though diminishing rapidly for new customers, offer one opportunity for canny consumers to get something back. These cards work like a normal credit card except they pay you each and every time they are used. Rather than giving away points or bonuses or free flights or some such reward, a cash back card gives hard cash, tax free every time the card is used.

It sounds crazy but these deals are out there because card companies want to encourage card use and want to encourage growth in card balances to earn interest. Offering cash they figure is a great way to achieve this.

However there are some things to watch out for when looking out for a cashback card and some actions to take to maximise their tax free earning potential.

Some cards don`t offer straight cash but vouchers or some other reward mechanism, usually tied to a particular retailer. These are nowhere near as attractive or as flexible as hard cash.

The benchmark rate is 0.5% cashback and any card paying more is a really attractive proposition but it is always a good idea to watch out for introductory offers and beware cards that might charge a monthly fee.

Cashback cards work great if the balance can be paid off in full each month. This is best done by setting up a monthly direct debit otherwise the interest to be paid each month will wipe out any cash earned. If it is not possible to pay off the bill each month, best to select a credit card based on interest rate.

And finally to earn as much free money as possible from these deals use the card for all normal spending. Use it to replace spending normally done by cheque, cash and other debit, credit and charge cards. Spending in this way is not an excuse to spend more but will mean the cash earnt for doing nothing quickly grows. But remember to pay back in full each month.

Cash back credit cards look great. It is rare shoppers can appear to get something for nothing but though these cards offer reward they also come with some risks. free cash can help you make the most of these offers and ensure that any free cash on offer truly is free cash.