How to get cash back on all your purchases with a cashback credit cards
Cashback credit cards offer money back for every pound spent on them and can be a great little bonus for people with a good credit score and who are able to clear their balance every month. Card providers reward customers with a percentage of their spending back in cash, which is usually credited to your card balance at the end of the year.
Don’t take out a cashback credit card if you don’t always pay off your balance in full at the end of the month. The percentage cashback you earn will be a tiny amount compared to the interest you will pay on outstanding balances. If this is the case, you should look for cards with the lowest interest rate or take out a new card with a 0% interest introductory offer.
How to use cashback credit cards
Firstly it is important to pay your balance off in full. So you should set up a Direct Debit from your current account which allows the card company to take the full outstanding balance at the end of every month. Note that in many cases the Direct Debit set up may not have been completed by your bank in time for your first month’s repayment, so you may have to arrange the first payment yourself, by cheque, over the phone on through your online banking.
Use your credit card instead of your debit card for all your usual spending. That way you are earning cashback on your usual purchases, however it is important to remember – earning cashback is not a reason to spend more than you normally would!
Replacing your debit card with your cashback credit card also gives you additional consumer protection for purchases over £100. This means that if you have any disputes with a retailer such as for non-delivery of goods, you may be entitled to your money back from your card provider.
Never withdraw cash on your credit card – you will not earn cashback and cash withdrawals usually incur a fee and may incur interest even if you pay off your balance at the end of the month. This is because may card providers give up to 2 months free credit for purchases. So if you pay your balance in full at the end of the month, you won’t be charged interest. However this credit period doesn’t apply to cash withdrawals which may start to incur interest from the day you take out the cash.