How to earn cashback on your shopping

credit card cashback

credit card cashbackHow would you like to earn money while you spend? It sounds too good to be true, but if you pay for your shopping with a cashback credit card you get money back with every purchase. Imagine that! It’s a bit like someone paying you to shop.

There are various cashback cards on the market and they typically give you back between 1% and 3% of your annual spend as cash. If, for example, you spent £3,000 over 12 months, you could get back up to £90.

Some cards entice customers with higher cashback rates for a limited period. The World MasterCard from Capital One is currently offering 5% cashback for the first three months, up to a maximum of £100.

You might also be able to earn different percentages for different types of spending. Santander’s 123 Card, for example, pays 3% cashback on fuel spending, 2% if you use your card in a department store or 1% in the supermarket.

A number of cards vary the cashback according to the amount you spend. So, you might earn 0.5% cashback if you spend up to £4,999, 1% on spending between £5,000 and £9,999 and 1.25% on anything above £10,000.

The cashback is usually calculated once a year with the money either credited to your account or sent as a cheque.

There must be a catch. Surely you don’t get money for nothing?

Cashback cards can be a great way to shop, especially in the run-up to Christmas. But they don’t suit everybody. Many of the cards charge interest of close to 20%, so if you can’t afford to pay off your balance in full each month, then the interest on your debt will easily outweigh the benefit of any cashback.