5 Types of Credit Cards That Can Save You Money
Published 13th of April 2012·Updated 13 April 2026
Reviewed by: Reviewed for accuracy April 2026
The right credit card can genuinely save you money, either by earning rewards on spending you would make anyway, cutting the cost of existing debt, or eliminating fees on overseas spending. The key is matching the card type to your actual spending habits and clearing the balance in full each month so interest never eats your gains.
Short Summary
Every type of money-saving credit card only delivers its benefit if you repay the balance in full each month (or, in the case of balance transfer cards, stick to the repayment plan). Interest charges will quickly outweigh any reward or saving if you carry a balance.
Use an eligibility checker before applying to any card. This uses a soft search that does not affect your credit score and shows you your realistic chances of approval.
No credit card is free. All cards have either an annual fee, an interest rate, or both. Read the full terms before applying.
1. Cashback credit cards
A cashback card pays you a percentage of what you spend back as cash. The American Express Cashback Everyday Card pays 5 per cent cashback on all purchases in the first three months (up to a set cap), then 0.5-1 per cent ongoing. The Barclaycard Rewards card pays 0.25 per cent with no annual fee.
Cashback cards work best for people who spend consistently on the card and pay the balance in full every month. If you carry a balance, the interest (typically 20-30 per cent APR) will far outweigh the cashback earned.
2. Rewards and points credit cards
Rewards cards accumulate points on every purchase, which you redeem against flights, hotel stays, shopping vouchers or statement credit. The most valuable points programmes in the UK include Avios (earned on British Airways, American Express and Lloyds cards), Nectar points (Sainsbury's and American Express) and Tesco Clubcard points (Tesco Bank credit card).
The value of a point depends on how you redeem it. Avios redeemed against a business class flight are worth significantly more per point than the same Avios used for cashback. If you travel regularly, a points card linked to an airline loyalty programme can be very rewarding over time.
| Card | Points programme | Typical earn rate |
|---|---|---|
| American Express Preferred Rewards Gold | Membership Rewards (converts to Avios) | 1 point per £1 |
| British Airways Amex | Avios | 1.5 Avios per £1 |
| Tesco Bank credit card | Clubcard points | 1 point per £4 |
| Sainsbury's Bank credit card | Nectar points | 1 point per £5 |
| Virgin Atlantic Reward card | Virgin Points | 0.75 points per £1 |
3. Low-interest credit cards
If you sometimes carry a small balance from month to month, a low-rate card reduces how much that costs you. Some providers offer ongoing purchase rates below 10 per cent APR, compared to the 20-30 per cent on standard cards.
The Lloyds Bank Platinum credit card and the NatWest credit card have offered rates in the 6-12 per cent APR range for eligible customers. Your actual rate will depend on your credit score; the advertised rate must be offered to at least 51 per cent of successful applicants, but the rate you receive may be higher.
A low-rate card is a safety net, not a licence to carry a balance indefinitely. Paying in full whenever possible is still the cheapest option.
4. Travel credit cards with no foreign transaction fees
Standard UK credit cards charge a foreign transaction fee of 2.5-3 per cent on purchases made in a foreign currency. On a £2,000 holiday budget that is £50-£60 in charges. A fee-free travel card eliminates this entirely.
The Halifax Clarity card and Barclaycard Rewards card charge no foreign transaction fees and offer competitive exchange rates. Note that the Halifax Clarity charges interest on cash withdrawals from the date of the withdrawal, even if you repay the full balance on time. Pay off cash withdrawals as quickly as possible to minimise that cost.
5. No annual fee credit cards
Some credit cards come with no annual fee while still offering useful features such as cashback, purchase protection or a 0 per cent introductory period. These cards suit occasional card users who want the benefits of a credit card without a recurring charge.
The Barclaycard Rewards card, the John Lewis Partnership card and the Capital One Classic card all carry no annual fee. No-fee cards are particularly well suited to people who use a credit card as a safety net for occasional larger purchases rather than for daily spending. Lenders typically require a good to excellent credit history for the best no-fee products.
Frequently asked questions
What is the best cashback credit card in the UK?
The American Express Cashback Everyday Card offers the highest introductory cashback rate (5 per cent for the first three months, up to a spending cap) among widely available UK cards, with 0.5-1 per cent ongoing. The Barclaycard Rewards card offers 0.25 per cent with no annual fee and no foreign transaction fees, making it a good all-rounder. The best card for you depends on your spending level and whether you want to pay an annual fee.
Are rewards credit cards worth it?
Yes, for people who clear their balance in full every month. If you regularly carry a balance, the interest charges will cost more than the rewards you earn. Used correctly, a rewards card is effectively a discount on spending you would make anyway.
What is the difference between cashback and points rewards?
Cashback is paid directly as money (either credited to your statement or paid into your bank account). Points must be redeemed through the card's rewards programme, which may give you more or less value per point depending on what you redeem them for. Points redeemed at low-value options (such as statement credit) are often worth less than cashback at the same earning rate.
Can I have more than one credit card?
Yes. Many financially organised people hold two or three credit cards: one for everyday spending with good cashback or rewards, one for travel with no foreign transaction fees, and potentially a 0 per cent balance transfer card to manage any existing debt. Avoid applying for several cards at once, as multiple hard searches on your credit file in a short period can reduce your score.
How do I choose the right credit card for me?
Start by identifying your main use case: reducing existing debt (0 per cent balance transfer), cutting overseas spending costs (travel card), or earning on everyday spending (cashback or rewards). Then use an eligibility checker on MoneySuperMarket or TotallyMoney to see which cards you are likely to be approved for without affecting your credit score.