Beat the energy price hikes with a cashback credit card
With energy price hikes adding at least £81 a year to the average household bill, using a cashback credit card is one way to balance the books:
Brits spend an average of £4,667 on their credit card each year which could earn them £80 if they shop with a card that has a cashback incentive
Despite this, over four in ten consumers (42%) don’t use any form of cashback or reward card for their everyday spending, missing out on a vital boost to their bank account
Debit cards now offer cashback too of up to 15% – but 71% of bank customers don’t take advantage of this
Uswitch.com highlights the top four credit card contenders for the festive season.
As the cost of living weighs heavily on household budgets with energy bills hitting an all-time high, every penny counts for most consumers in the run up to the festive season. But new research from Uswitch.com, the independent price comparison and switching service, reveals that over four in ten (42%) consumersare missing a trick by shopping with a basic credit card with no cashback or other reward incentive, when they could be getting a vital boost to their bank accounts in the new year.
According to the research, standard credit cards that offer no defining features continue to occupy the top slot in consumers’ wallets and are used for the whole spectrum of spend throughout the year. With the average consumer spending £4,667 a year on their cards, Uswitch.com calculates that the 62% who pay off their balance in full each month could earn £80 in cashback revenue – a welcome bonus for cash-strapped Brits, especially with Christmas rapidly approaching.
This season’s cashback credit card deals offer as much as 5% back on spending for the first three months, with up to 1.25% after. But cashback is not just for credit cards – current account providers are now jumping on the cashback bandwagon. For example, Lloyds Bank is offering 15% cashback on spending at a number of popular retailers such as Argos, Homebase and New Look. Halifax also offers 15% cashback when you spend on your debit card at number of retailers. However, as it stands, 71% of consumers are missing out on these deals by shopping with a basic debit card with no cashback incentive.
Michael Ossei, personal finance expert atUswitch.com, says: “Using a card that pays you every time you spend is an easy win and a simple way to give a boost to your finances. As we ramp up our spending in the run up to Christmas, this free money is a ‘no brainer’ for anyone who pays off their balance each month in full, and could be an extremely welcome way to refresh exhausted bank accounts for the new year.
“Debit cards have now jumped onto the cashback bandwagon and are competing hard with credit cards for a slice of our spend, so the deals are better than ever. Some cards are tailored towards people’s spending patterns while others are geared around people’s income. To ensure you are choosing the right card for your needs read the small print and check that the card suits your financial situation and spending habits. It’s also important to remember that these cards will only benefit those who are vigilant in paying off their card balance in full every month.”
Uswitch.com’s pick of the cashback cards for Christmas
The everyday card: Cash-in on your Christmas shopping with the American Express Platinum Cashback Everyday Card. The card offers 5% cashback on all purchases in the first three months, which conveniently covers the festive season. You can then continue to earn cashback at a rate of 0.5% up to 1.25%. The rate goes up according to your spending, with the 1.25% rate applying to any extra spend over £7,500 in a year.
If you want the 1.25% guaranteed then you’ll need to pay £25 a year with the American Express Platinum Cashback Card. This card gives you the same 5% cashback rate for three months but on purchases up to £2,500. You can claim back the annual fee in cashback while still making a profit if you spend just over £200 every month.
Big spenders: The Capital One Aspire Elite card is well suited for those planning on putting a lot on their credit card – you could get £80 if you spend around £833 per month or £250 if you spend £1,500 a month. However the card comes with a £120 annual fee attached.
The all-rounder: Santander is spreading the festive joy by offering 1% cashback on all purchases on Amazon.co.uk from November to the end on January 2014 on its 123 Cashback Credit Card. But this card isn’t just for Christmas. The card also rewards all year round spending with 3% cashback on travel and petrol, 2% cashback at major department stores and 1% cashback at supermarkets. The annual fee of £24 can be quickly made up within a few months on your weekly grocery shop alone. But loyalty pays – those with the 123 Santander Current Account won’t have to pay the annual credit card fee if they sign up before the end of the year.
Cashback for bad credit: Even with bad credit you can still enjoy cashback thanks to Capital One, whose Classic Extra card rewards 0.5% cashback on all purchases. On top of this, you’ll be rewarded with a £10 annual bonus if you pay your balance on time
Best Cashback Credit Cards (based on cashback earned in the first year on a £400 per month spend):
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American Express Platinum Cashback Everyday
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Free
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Introductory rate: 5% for the first 3 months. On-going cashback rate: up to 1.25% (tied according to spend). Cap £100 in the first three months.
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£79
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Santander 123 Credit Card
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£24
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Fee waivered in first year for 123 current account customers. Cashback rate: 1% in supermarkets, 2% in department stores, 3% on petrol / trains. Max cashback – £9 per month on petrol / trains.
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£65
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American Express Platinum Cashback Credit Card
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£25
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5% for the first 3 months and on-going rate of 1.25%. Extras include double cashback (2.5%) for one month every year.
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£80
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Capital One Classic Extra
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Free
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0.5% cashback on all your purchases with no annual fee to pay. Geared towards building your credit rating, with a maximum credit limit of £1,500.
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£34 (including £10 bonus if you pay your balance in full each month)
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Nationwide Building Society Select Credit Card
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Free
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For Nationwide customers only. 0% on balance transfers for 26 months and 0.5% cashback on pound sterling purchases. Commission free purchases abroad.
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£24
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FOR MORE INFORMATION
Alexa Wheeler
Phone: 0207 1484 661
Email: alexa.wheeler@uswitch.com
Twitter: @uswitchPR
Notes to editors
Research in the notes below was conducted with the Uswitch.com online Consumer Opinion Panel in October 2013 amongst 1,212 credit card holders.
Based on a medium user consuming 3,300 kWh of electricity and 16,500 kWh of gas on a standard dual fuel tariff, paying quarterly by cash and cheque, with bill sizes averaged across all regions. Average annual standard bill following price rises announced to date will be £1.434 a year up £81 from £1,353 a year.
UK Cards Association 2012 report shows 61% UK population own a credit card, which equates to just over 30 million adults. Total annual credit card spend is £140bn http://www.theukcardsassociation.org.uk/2012-facts-figures/credit_charge_card_figures_2012.asp. which means the average individual credit card spend is £4,667.67 a year and £388.91 a month rounding up to £400 a month. Taking the American Express Platinum Cashback Credit Card £400 x 3 months = £1,200 with 5% cashback = £60. £400 x 9 months = £3,600 with 1.25% cashback = £45. Total cashback £105, minus £25 annual fee cashback is £80.
In response to: ‘What credit card(s) will you use? (Please tick all that apply)’, 24% said that they used a Cashback credit card and 34% use a Reward credit card.
Based on Lloyds Everyday Offers current account and Halifax Cashback extras.
In response to: ‘If you are using a debit card, does it have a cashback incentive scheme?’, Of those that used a debit card - 71% didn’t have a card with a cashback incentive scheme.
This refers to the American Express Everyday card.
UK Cards Association 2012 report shows 62% of credit card holders pay off their balance in full each month http://www.theukcardsassociation.org.uk/2011-facts-figures/credit_charge_card_figures_2011.asp
Based on a spend of £200 every month for 12 months.
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