Cashback Credit Cards: How to Earn Money on Your Everyday Spending
Published 26th of January 2014·Updated 18 April 2026
Reviewed by: Reviewed for accuracy April 2026
A cashback credit card pays you back a percentage of everything you spend on it. Rates typically range from 0.5% to 5%, depending on the card and spending category. If you clear the full balance every month, you pay no interest and keep all the cashback. Spend £1,000 a month on a 1% cashback card and you earn £120 a year for free.
Short Summary
Cashback credit cards only work in your favour if you pay the full statement balance every month. If you carry a balance, the interest you pay will almost always exceed the cashback you earn.
American Express consistently offers the highest cashback rates in the UK, but is not accepted by all retailers. Cards from Barclaycard, Halifax and Capital One are more widely accepted and still offer competitive rates.
Some cards offer boosted cashback rates for the first three to six months, then a lower ongoing rate. If you want long-term value, compare the standard rate rather than the introductory offer.
Cashback credit cards also provide Section 75 purchase protection under the Consumer Credit Act for purchases between £100 and £30,000, adding an extra layer of value on top of the cashback earned.
How do cashback credit cards work?
Every time you make a purchase on a cashback credit card, the card provider pays you a small percentage of the transaction value. This cashback is either paid into your card account monthly, credited annually, or (with some cards) transferred to a linked bank account.
For example, if you spend £500 on a 1.5% cashback card, you earn £7.50 on that transaction. Over a full year of regular spending, this adds up meaningfully without you having to change what you buy.
The key rule: never carry a balance. Interest rates on cashback cards typically run between 22% and 30% APR. A single month where you do not clear the balance in full can wipe out months of accumulated cashback.
Which UK cashback credit cards offer the best rates?
| Card | Standard cashback rate | Introductory offer | Annual fee |
|---|---|---|---|
| American Express Platinum Cashback Everyday | 0.5% up to £10,000; 1% above | 5% for first 3 months (up to £100) | None |
| American Express Platinum Cashback | 1% up to £10,000; 1.25% above | 5% for first 3 months (up to £125) | £25 per year |
| Barclaycard Rewards | 0.25% on all spending | None | None |
| Halifax Clarity | 0.5% overseas spending only | None | None |
| Capital One Classic Cashback | 0.5% on all spending | None | None |
Rates and terms are subject to change. Always check the card provider's website for the current offer before applying.
American Express offers the highest rates, but a significant number of smaller retailers and some supermarket self-checkouts do not accept Amex. If you want a card that works everywhere, a Visa or Mastercard cashback card is more practical, even at a lower rate.
What are loyalty points cards and how do they compare to cashback?
Some credit cards offer reward points instead of direct cashback. These points can be redeemed for flights, hotel stays, gift vouchers or retail purchases. Popular schemes include:
- Avios (British Airways, through Barclaycard or American Express): each point is worth approximately 1p when redeemed for flights, more with smart redemptions
- Nectar (American Express Nectar card): points redeemable at Sainsbury's and partner retailers
- Tesco Clubcard (Tesco Bank Mastercard): points convert to Clubcard vouchers, worth up to 3x their value when used for certain rewards
Points schemes can offer better value than cashback for frequent travellers or loyal shoppers at specific retailers. For everyone else, cashback is simpler and its value is guaranteed.
Before committing to a points card, check the redemption rate. A card offering 10 points per pound is only generous if each point has meaningful value. Divide the reward value by the spend required to work out the equivalent cashback percentage.
How to maximise cashback earnings
To get the most from a cashback card:
- Use it for all your regular spending: groceries, fuel, bills and subscriptions.
- Set up a direct debit to clear the full balance automatically on the due date every month.
- During a high-rate introductory period, bring forward any large planned purchases to earn the maximum cashback.
- Once an introductory rate ends, review whether the ongoing rate is still competitive and switch if a better offer is available.
- Do not use the card for cash advances; these do not earn cashback and attract immediate interest.
If you spend £1,500 per month on a 1% cashback card and clear it in full every month, you earn £180 per year. Over five years that is £900 in free cashback on spending you would have done anyway.
Does cashback credit card spending affect my credit score?
Using a cashback card responsibly can improve your credit score over time. Paying on time every month adds positive payment history to your file with Experian, Equifax and TransUnion.
However, applying for a new card triggers a hard credit search, which causes a small temporary dip in your score. Avoid applying for multiple cards within a short period, as several hard searches in quick succession signal higher risk to lenders.
Section 75 protection: the bonus benefit of cashback cards
Beyond cashback, credit cards provide legal purchase protection under Section 75 of the Consumer Credit Act 1974. If a retailer fails to deliver goods or goes out of business, and the purchase was between £100 and £30,000, your credit card provider is jointly liable with the retailer.
This makes a cashback credit card particularly valuable for booking holidays, buying electronics or making large purchases where the retailer could potentially fail to deliver.
Frequently Asked Questions
How is cashback paid out on a credit card?
This depends on the card provider. American Express credits cashback to your account annually on your card anniversary. Some providers, including Barclaycard, credit cashback monthly. Others pay it as a statement credit rather than cash. Check your specific card's terms for the payment schedule and method.
Can I get a cashback card with bad credit?
Most cashback credit cards are reserved for applicants with a good or excellent credit score. If your credit history is limited or has negative markers, you are more likely to be approved for a credit-builder card. These do not offer cashback, but using one responsibly for 12 months can improve your score enough to qualify for a cashback card in future.
Is there a limit on how much cashback I can earn?
Some cards cap annual cashback at a fixed amount. American Express, for example, may cap introductory cashback at £100 or £125. Standard ongoing cashback is often uncapped, but always check the card's terms. If you spend heavily, an uncapped card will deliver more value in the long run.
What happens to my cashback if I close the card?
Most providers pay out any accrued cashback before the account closes, or apply it as a statement credit. Some providers may forfeit cashback if you close the account before the annual anniversary. Check the terms before cancelling to ensure you receive what you have earned.
Do cashback cards charge an annual fee?
Some do, some do not. The American Express Platinum Cashback card charges £25 per year but offers a higher cashback rate that typically outweighs the fee for moderate spenders. The American Express Platinum Cashback Everyday card has no annual fee with a slightly lower rate. Run the numbers based on your expected spending to decide which is better value for you.