I read a lot of personal finance blogs and the majority of those, especially those based in the US, mention reward credit cards. Some of those blogs have posts dedicated to different cards, singing their praises and explaining just what rewards they get from these cards.
But, a money confession from a PF blogger: I don’t use reward credit cards.
I think maybe the reason I haven’t even looked at them is because, at the end of the day, it’s a type of credit card. I have one credit card at the moment which I use occasionally and always pay off in full. I don’t use it every month – I have no need to particularly – and it doesn’t ever occur to me to use it for any other reason. Because we have a budget that works well, I never seem to need any credit for anything (and that’s a good thing!) but perhaps I could be being more savvy when it comes to using credit cards to my advantage.
I have a friend who has the Santander 123 credit card, which earns cash back at various places. These include supermarkets, petrol stations and national rail. There is a charge of £24 per year for the card, but this is taken out of your earnings (I think). But, using their calculator to work out how much cash back I’d get over a year and it would be approximately £60. Now, if you minus the fees of £24, that leaves me with a cash back total of £36 a year. Nothing to be sniffed at I suppose – better in my pocket than in theirs!
Another one is the American Express Platinum Cashback Everyday card which has a tiered system of cash back rates, depending on how much you spend. There’s a 5% offer for the first three months, where you have to spend £2,000 to get the maximum benefit of that. After that, anything less than £3,500 gets 0.5% cash back, which seems like an awful lot of spending to not get very much. We spend nowhere near that a month so this probably isn’t a good idea for us.
There’s the Tesco Clubcard Credit Card which earns you Clubcard points which you can spend at Tesco stores. You earn one point per every £4 spent, which doesn’t seem like a lot. As someone who doesn’t live anywhere near a Tesco, or a Tesco garage, this definitely isn’t a good option for us.
The M&S Credit Card works in a similar way to Tesco, but seems slightly better. You can get one point for every £2 in any shop you spend, or one point per £1 if you shop in M&S (Marks and Spencer) and points are converted to M&S vouchers four times a year. These could be spent in their food hall, so could be handy, especially in the festive period. Perhaps this is one to look at?
These seem to be the best options, but they don’t really fit our needs particularly well. I think the best one would perhaps be the Santander 123 card, followed by the M&S card. I do wonder whether it would be worth it, but then again, it’s money and/or vouchers we could be getting and we wouldn’t have to change our spending habits.
Do you use a reward credit card? Do you think they’re a good idea? I’d love to hear from you!