Cashback Credit Cards- A Great Way To Spend

Credit Card

Has anyone got a cashback credit card? If so, which one, and what kind of deal do you have?

I’m not entirely sure how popular cashback cards are, or how long they have been knocking around for, but I’ve only recently discovered the fruit. They seem like a neat idea to me.

What is a cashback credit card?

Basically, cashback credit cards pay you each and every time you spend on them. For example, a particular cashback card may offer a 3% cashback amount on every spend. If you buy something for £100 using your cashback credit card, you’ll get £3 (which is 3% of £100 ) back. Over the period of the year, you can potentially earn £100s. Granted, it might not be a fortune, but it’s better than nothing, that’s for sure.

Available deals

As always, there are plenty of deals about. If you’re interested, it’s probably best to Google around and see what takes your fancy. You could even walk into your local bank or building society and see if they have something a little special on offer.

I personally applied for the American Express Platinum Cashback Card, which offers a 5% cashback in the first 3 months, and up to 1.5% after that, with no limit on how much you earn.

I’ve noticed an OK deal from Abbey- the Abbey Credit Card. The new Abbey Credit Card gives you up to £75 cashback on your petrol and supermarket shopping. 3% cashback (up to £12.50 per month) for 6 months from the date of account opening will be paid on purchases at most major supermarkets and petrol stations.

Optimum time to use a cashback credit card

I’m currently in the process of renovating my bedroom; I plan on buying a new Plasma TV and surround sound system, and various other geeky crap that’s going to help pimp the gaff. I’ll be spending quite a bit of money in the coming weeks- that’s precisely why I got the American Express Platinum Cashback Card. I’ll be able to claim back 5% of everything I spend. I think it will be worth it, personally. I’ll probably do something similar when I buy another house- I can put a lot of the expenses on the card and reclaim.

Reasons why I decided to use a cashback credit card

I’ve always been a rabid fan of using debit cards (and still am). In fact, before applying for the American Express Platinum Cashback card, I’ve NEVER had a credit card before- I had no need for one. I’m one of those strange people that won’t buy anything unless I have the physical cash available sitting in my bank account.

However, after reading up on credit cards, I realised that as long as I pay off the negative balance each month, there really isn’t any disadvantages, only advantages. Credit cards become dangerous when the negative balance is slowly repaid on a monthly basis- that’s when interest rates accumulate. However, as mentioned, I never buy anything unless I actually have the funds available in the bank so I would clear the balance via direct debit each month, avoiding all interest rate charges. Consequently, I really have no reason not to get a cashback credit card if it’s going to help me make extra cash.

Additionally, buying with a credit card is so much more secure than using any other form of payment. As I am the modern man, I buy most of stuff online, so I get a lot of stuff delivered. It’s just so much more convenient, especially in the winter, when I can’t tolerate being out in the hideous ice age climate. With credit cards you actually have far more consumer protection. This all comes about due to what’s called Section 75 of the Consumer Credit Act 1974 which says…

75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor

That basically means that if you buy something costing over £100, here or abroad, and pay on a credit card, the card issuer’s equally liable if something goes wrong. With so much credit card fraud going on, especially online, it’s better to be safe than sorry. This protection only applies to credit cards.

Why do companies offer cashback deals?

It’s to encourage people to spend on the card so they can earn interest from it. They’re actually hoping you don’t make the monthly payments on time. Sadly, a lot of people don’t, and that’s when the card companies start compensating from their free reward schemes.

Always remember the golden rule

Set up a direct debit to pay the card off in full each month, so you’ll never pay interest. You get me?

Anyways, back to my initial questions: has anyone got a cashback credit card? If so, which one, and what kind of deal do you have? How has it been working out for ya?

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2 Comments- Join The Conversation...

Guest Avatar
sam 8th January, 2009 @ 03:10

Good idea property am. Not only will your house get blinged up without you going out in this freeze but you will you get cash back (and more consumer protection) and even better you will also help save the economy via your spending. That way recession will end sooner and house prices can start recovering. Triple winner!

More importantly when you have pimped up your bedroom will sexy property history girl be coming over to film an updated property class??

1
The Landlord Avatar
The Landlord 8th January, 2009 @ 09:39

Ha, it's a bit cold at the moment, so maybe once it warms up i'll be making a second edition :)

I actually need to think of ideas for the next productions!

Cheers

2

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