Updated: 16/5/2012

These are cards that will give you cashback, points or Avios when you use them. They’re not to be confused with the loyalty cards that some shops and businesses offer (like Nectar, Tesco Clubcard and the Boots card). These are actual credit cards that you use to buy things. However you get a bit back, in some form, whenever you spend with them.

They’re great for people who always pay back their credit card bill each month before the interest period kicks in because it means they’re getting something back for their spending. However, there’s no point bothering if you can’t pay the debt off each month. Better to go for the card with the cheapest interest rate you can find to keep your bills down.

N.B. Ignore this article if you don’t pay off your balance in full each month. It’s not worth going for the rewards if you are paying more interest on your debt.

• Best cashback card is the American Express Platinum MoneyBack Credit Card
• If you are a fan of John Lewis or Marks and Spencer their cards give good reward points.
• Credit cards that offer rewards, points and Avios.
• Credit cards that offer cashback when you spend.

Cashback Cards

The cashback cards we like are:

American Express Platinum CashBack Credit Card. This card offers 5% cashback for the first three months on up to £2,000 of purchases. Then 1.25% cashback is earned on every full pound spend, with interest being doubled in your anniversary month to 2.5% if you have spent £10,001 or more in the preceding 12 months. Your anniversary month is the day you opened your card and the following month. So for example if you opened you card on 10 January, your anniversary month would be 10 January – 10 February. This card has an annual fee of £25 but it’s still worth it if you’re a big spender.

Bank of Ireland is offering a card that gives 0.5% cashback on your spend up to £15,000 per year. They also give you 0% on purchases for the first 3 months.

Who should use rewards cards?

Nearly two thirds of credit card holders pay off their balance in full every month (good for them). If you are one of those savvy people who don’t have to pay extra each month then the interest rate on your card will be irrelevant.

Now is the time to demand rewards for your spending, though. Check out our best buy list below and pick the one that will give you the most money or the best rewards.

Reward Cards

The reward cards that have the most worthwhile deals are:

• The Virgin Atlantic card - with this you get two credit cards with a typical APR of 17.9%. To begin with you get 3,000 bonus Flying Club miles when make your first purchase within 90 days of opening the account, after which you’ll get one mile for every £1 spent with the American Express card and one mile for every £2 you spend with the Visa card. You’ll also earn double miles when you spend direct with Virgin Atlantic or Virgin holidays.

• Lloyds TSB Duo Avios Credit Card Account - this account gives you two credit cards with a typical 15.9% APR; a Mastercard and an American Express card. You gain 1,500 Avios for every whole £1,000 spent. With the American Express card, you earn one Avios for every £1 you spend and one Avios for every £5 you spend with your Avios Duo MasterCard.

• British Airways are also running an Avios scheme with American Express. You get 1,000 free bonus Avios when you sign up for the card and spend £500 in the first three months of membership, then it’s one Avios per £1. There’s no annual fee and the APR is 19.9%. You also get travel accident benefit up to £75,000 with the card.

• AA credit card is handy for anyone who uses the AA. They give you a reward of one point for every full £2 spent, with one point for every £1 spent on Fuel, Motoring or AA products. Reward points can be redeemed at any time on a range of products and services from AA, motoring and travel products, shopping vouchers and cash back.

Then there are cards that are worth it if you are a big fan of certain shops:

• The John Lewis and Waitrose partnership MasterCard is 16.9% APR and promises 0% interest on purchases for six months from account opening. Every time you shop you earn points towards vouchers to spend at participarting stores.
• Similarly, the Marks and Spencer Credit Card will give you one point for every £1 spent in Marks and Spencer and one point for every £2 spent elsewhere. 100 points will get you a £1 voucher, which you can then spend in Marks and Spencer. The card also offers 0% on purchases for 15 months.
• Earn one point for every £4 you spend with the Tesco Clubcard credit card (five points on fuel at their garages). The card also has 16 months at 0% on purchases, a typical APR of 16.9%  and nine months at 0% on balance transfers with a handling fee of 2.9%.

Getting Started

IF you know you will pay off your balance every month, and IF you have the discipline not to spend more just to get the extra points, then switch to a credit card that will reward you for spending. It’s up to you whether you want:

Money back

• American Express
• Bank of Ireland

Miles

• Lloyds TSB Duo
• Virgin Atlantic  Card
• British Airways American Express

Points

• John Lewis and Waitrose
• Marks and Spencer