Customers are starting to discover that by buying everything on their cash back credit card and paying it off in good time every month, it is possible to clear as much as £200 back in a year, and sometimes more than that.
Cash back credit cards operate by refunding you a small percentage of what you have spent using the card, usually between 0.5% and 1.5% of total expenditure.
Surprisingly, some cash back credit cards, during their introductory phases, will even give you back as much as 5%. That's enough to light up those flashing £ signs in your eyes!
What you will be able to save will add up during the course of the year. For example, someone spending in the region of say £13k - £14k per annum and using their cash back credit card for all transactions during that time will be richer by as much as £200 by the end of the year.
So what should you be looking out for when you compare cash back credit cards?
Ask Yourself: How much cash back will I get?
You must focus chiefly on the cash back rate when you are browsing through the comparison tables to accurately weigh up the options of the various cash back credit cards available.
Do remember that the highest cash back amount which any card offers will usually only last a few months, so it is best not to set too much store by the higher figures on the credit card comparison tables.
To get a more accurate comparison of the various cash back credit cards - there are not that many at present - it is best to examine the small print carefully to see exactly what levels of cash back rewards are on offer, rather than concentrating on the more lavish rates aimed at attracting customers.
Ask Yourself: Will I get cash back on everything I buy using the card?
Some of the cash back credit cards, like Egg credit card, offer cash back on goods bought from selected stores only, which though generous, is restrictive.
It is preferable to ensure that the cash back facilities on your credit card apply to all purchases at outlets of your choice. After all, there are enough restrictions in everyday life without adding to them!
Ask Yourself: How much will I pay in interest if I don't meet the minimum monthly payments?
In order to get the most out of the cash back credit card system, you must ensure that you meticulously pay your credit card bills in full before the end of the month or you will be hit by the card's penalty rate (APR), immediately obliterating any profits you have accrued from the cash back facility.
To maximise cash back you should buy everything on the cash back credit card, but any lapse in paying off the full amount owing on your card by due date will sadly leave you being pole axed by the dreaded APR.
Ask Yourself: Have I compared the best cash-back credit cards?
The leader of the pack in the cash back credit card field, American Express Platinum credit card, is currently offering an incredible introductory cash back rate of 5%.
Whilst this sounds a pretty good initial offer, in reality it will get you 1.5% cash back if you spend more than £10,001 on the card in any year.
Still, if you spend a little over £13,000 during the first year on the best cash back credit card on offer at the moment, you’ll find yourself richer to the tune of £285 by the end of that year and by a further £201 a year after that.
