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!
I’ve got the 123 card, as I drive and use the train, so I’m getting around £6 per month from that alone. The best way to use it, I find, is to combine it with the 123 current account, in fact the account is probably even better as it gives you cashback off your everyday bills. Is like totally free money
I do need to investigate this further, as I think this is probably the best one for us at this stage.
The cool thing about it is that even if you don’t want a credit card, and I often think about getting rid of our, just for simplicity’s sake, the current account is bound to give you a few free quid a month for doing nothing but paying your bills
We use one credit card for rewards. We get 1% for every dollar we spend. We also get 1% fit every dollar we pay. I find the marketing gimmick to be crazy – we will reward you for paying your bill. Since we obviously pay it in full every month, we get 2% cash back. Good by me.
I also like how it helps with cash flow. In an effort to keep as much invested as possible, we let the bank balance drop fairly low. Knowing that I don’t have to wonder about what’s available in checking gives me some peace of mind. I’m also imposing a new strategy of paying the current balance on each payday. That way cash flow keeps up with spending. And we have no surprises.
I think that there are many more options in the US than in the UK in terms of reward cards – rewarding you for paying your bill seems mad! But hey, if it’s there for the taking 🙂
Nicola,
Just like you, I’m also not taking advantage of reward credit cards. I think they’re much more common in the US than over here in Europe.
To my knowledge the only ones available in Belgium are for petrol stations and very specific kind of stores. There’s one from the former Citi Group that gives you a 3% cashback on online purchases which I’ve been meaning to check out, but haven’t gotten around to it.
Maybe the lack of reward credit cards has to do with the fact that credit cards aren’t as popular here?
Have a great weekend!
NMW
I do think that they are definitely more common in the US then over here. Also, maybe credit cards aren’t as popular, like you say? I hope you’re having a great weekend!
We use a travel card and get 1.5% back for travel. It’s helping us save for my brother-in-law’s destination wedding. Everything goes on the card and we pay it off each month. Helps for tracking spending too because everything is recorded.
That sounds like a great plan 🙂
When I first started blogging, I didn’t have a rewards card, either. I had one basic credit card. I figured it would be worth it to earn some extra money while I’m making usual purchases, though, so I applied for one and haven’t looked back. Recently, I got an actual travel rewards card, and I’m excited to take a free flight somewhere!
A free flight sounds awesome!
I have learn some excellent stuff here. Definitely value bookmarking for revisiting.
I wonder how so much attempt you place to make this type of
fantastic informative web site.
I see the perks of them, but I don’t have a reward card either. I think that if you fly a lot it makes sense to have a card that will give you reward miles, though.
Yes, if you were flying often I guess it would make more sense. Thanks for stopping by!
We do use rewards cards for our every day purchases. The amount earned may not be huge but it adds up over time and on purchases we would have made anyway. For example, the hubby just had LASIK surgery. The company did not offer a cash discount so we used our Visa to gain Nordstrom Notes. That’s $60 to spend at my favorite store;0) It is super easy to get out of control though so it isn’t for everyone … even us sometimes;0)
A credit card is always going to be a temptation, no matter what the rewards!
I rarely use my credit card so I dont have many rewards. People just look how many rewards they get but most of them fail to see how much debt they get.
Hello, just wwanted to say, I enjoyed this article.
It was helpful. Keep on posting!
As someone who worked in the Lotalty Rewards Industry for 7 years, reward cards are something Inude on a daily basis. Not just credit cards, but all loyalty cards. I’m originally from North America, and agree that they have far more reward card options over there than they do here. I think that if your a savvy smart shopper than there’s always room in your life for at least one reward credit card. Take the money you would use from your debit card and put it straight onto your credit card after using it to make purchases. There is no outstanding balance to pay and you’ll benefit from the rewards. My card of choice is the Tesco Credit Card. We shop at Tesco frequently and rack up the points which can be used on a wide variety of things from travel to restaurants. Last time I checked we had over £26 in vouchers that are due to come to us in our next statement. We will exchange these for various family friendly restaurant vouchers at four times the value, so over £100 to national chains like Pizza Express. Not bad! And as a family of 3, that would give us 3-4 free dinners out!
That’s great! There isn’t a Tesco particularly near us, otherwise that would be very tempting.
We are in the US so know we have more options, but we love using an airline rewards card, in our case the United Airlines card. We charge most everything and pay balances in full, and earn lots of free flights along the way. It helps that we travel a lot for work and get the credit card miles in addition to the flight miles, but you don’t need to travel much to get the benefit. Do any of the EU carriers offer such a card? On the other hand, back when we were paying off debt, we wanted every dollar accounted for, and therefore only used debit cards. So we understand both sides!