The credit card deals that pay you back for spending

Being paid to shop might sound too good to be true, but if you pick the right credit card you could earn something back every time you spend.

Some card providers offer cashback on the amount you spend, while others offer rewards which allow you to earn points as you shop. Once you’ve collected enough, these can then be exchanged for perks such as flights, hotels or days out.

A reward card can work well when used for all normal spending, as even relatively small bonuses can add up over time, as well as big ticket purchases if you’re buying new furniture or jewellery, for example.

However, you can end up paying some hefty interest, so it’s best to make sure you can clear the balance every month.

There are currently 47 reward credit cards on the market, and 11 credit cards that offer cashback, according to Moneyfacts.

The key is to choose one card and stick to it. Andrew Hagger of MoneyComms, a personal finance website, said: “If you have a wallet or purse full of reward cards you’ll be spreading your spend quite thinly and it could take a while to earn anything meaningful.

“If you’re savvy with your card selection you can get a decent financial kick back in return for your loyalty.”

Here, Telegraph Money digs out some of the best credit card rewards on offer, as well as pointing out the pitfalls to avoid.

What credit card rewards are on offer?

If you’re after cashback, the American Express Platinum Cashback Everyday credit card is the most generous card without a monthly fee.

There’s an introductory rate of 5pc cashback for the first three months, where you can earn up to £100. After that, cashback is paid at 0.5pc on the first £10,000 of spend, and 1pc over that. The representative APR interest is 30pc (variable).

The American Express Platinum Cashback credit card offers 5pc cashback on up to £125 for the first three months, then 0.75pc on spending up to £10,000 and 1.25pc cashback on spending over this threshold. It has a 35.6pc representative APR and a £25 annual fee.

Alternatively, the Halifax Cashback card and Lloyds Bank’s Cashback credit cards both pay 0.25pc on the first £4,000 of spend per year and 0.5pc above that. Barclaycard Rewards Visa, meanwhile, pays 0.25pc in cashback.

Elsewhere, Santander’s All in One credit card pays a higher rate of cashback at 0.5pc and includes a 0pc introductory purchase offer for 15 months, though there’s a £3 monthly fee.

Credit card reward schemes are more difficult to compare, and the benefits can be quite complicated. In general, it makes sense to go for the deal that comes with the retailer where you do most of your spending.

Marks & Spencer regulars, for example, can get lots of different rewards with the M&S Bank Reward Offer credit card.

It gives you two points for every £1 spent at M&S for the first 12 months, dropping to one point per £1 spent in M&S in year two and beyond. You’ll earn one point for every £5 spent elsewhere. Each point is worth 1p in M&S vouchers.

Big spenders could upgrade to M&S Club Rewards for £10 a month, which boosts your rewards. You get an extra two points per £1 spent at M&S, on top of the points you already get.

The membership also includes £65 in vouchers to spend on clothing or home goods, 32 hot drink vouchers for the M&S café, a £12 gift voucher on your birthday to spend on food, and free next-day delivery for online orders (normally £4.99).

The John Lewis Partnership card works well for loyal shoppers of John Lewis and Waitrose.

You earn five points for every £4 spent on purchases at both stores and one point for every £4 spent elsewhere. There’s an introductory offer – for the first 90 days you get triple points – 15 points for every £4 spent on purchases at John Lewis and Waitrose and three points for every £4 spent elsewhere.

For every 500 points you collect you’ll get a £5 voucher to spend with either brand. You can also have up to three additional cardholders so you can pool the points for household spend.

John Lewis changed card providers last year and existing customers have experienced problems such as their spending limit cut and having applications declined for a new card. A spokesperson for John Lewis Finance says the issues are behind them. “Over 600,000 existing customers successfully applied and the average spend is now higher.”

Sainsbury’s shoppers, meanwhile, can boost their Nectar points with the Sainsbury’s Bank Mastercard. You can get 8,000 bonus Nectar points if you spend more than £400 at Sainsbury’s or Argos in the first two months. You’ll then earn one point per £2 spent at Sainsbury’s or Argos, rising to three points if you scan your Nectar card. You’ll also earn one point per £5 spent elsewhere.

Elsewhere, Tesco Bank credit cards pays five Clubcard points per £4 spent in store, and one point per £8 spent elsewhere.

Every three months your points are turned into vouchers to spend at Tesco, or they can be exchanged to get up to twice the value of your vouchers with reward partners. The rules were changed in June making this less generous. Previously the vouchers were worth three times the value when redeemed with partner retailers.

Plastic pitfalls

The sky isn’t the limit when it comes to cashback, as some cards have a cap setting a maximum amount you can earn, so make sure you’re aware of this before you sign up.

If you max out your cashback, it may be better to swap to a debit card for any extra spending – or even an alternative reward card.

You should also crunch the numbers if you’re tempted to apply for a card with a monthly or annual fee. Will you reap enough benefits to offset the cost?

With the reward cards, be sure to read the small print on how you actually earn rewards. If you need to spend thousands just for £5 off your shopping, it could be worth going for a different card.

Another fact within the terms and conditions is that anyone taking out an American Express cashback card won’t be eligible for the introductory bonuses if you’ve had an Amex card in the last two years.

You should also be aware that Amex is not accepted at all businesses and online retailers, so check that it’s accepted wherever you want to spend.

As we’ve mentioned, bear in mind that reward cards are not for those who need to borrow. These are only of benefit to those who pay off their balance in full every month, as usually APRs are pretty high, which means any interest charges would likely wipe out the value of any rewards earned.

It can be a good idea to set up a direct debit so the balance is automatically repaid in full each month.

Finally, keep an eye on your spending. Mr Hagger said: “Reward cards are a good way to cash in on the way you spend but remember, it shouldn’t be used as an excuse to overspend.”

Which are the best credit card rewards you have come across? Tell us in the comment section below