How much can I earn back?
The best deal on the market is currently being offered by American Express' Platinum Cashback Card, which pays out 5% of your total expenditure during the first three months on spending of up to 2,000 pounds. After this period the rate drops to 0.5% on spending up to 3,500 per year, rising to 1% on annual spending betweenandnbsp; 3,501 andandnbsp; 10,000, and 1.5% on spending above this level.
Other deals include Bank of Ireland's Moneyback MasterCard and Barclaycard OnePulse with Cashback. Both offer cashback rates of 0.5% on spending of up toandnbsp; 15,000 a year andandnbsp; 6,000 a month respectively.
The pros:
Financial reward: Cashback cards are a great way to earn money back on purchases you would be making anyway. If you switch all of your regular monthly spending, such as food, petrol and transport costs to one of these credit cards, you'll get a financial reward at the end of the year.
Earn interest: You can increase the benefits of using one of these cards for your regular spending by placing your salary in a high-paying current account or by transferring it to a savings account. This will ensure you're earning interest on it until it's needed to settle your credit card bill.
Discounts: Cashback cards often give you a special introductory rate so it's worth signing up to one if you're planning to make a big purchase, such as a holiday or new television. A typical introductory cashback rate of 5% is equivalent to getting a 5% discount on the product you're buying.
Maximum returns: Some cards offer higher cashback rates for certain types of spending, so you can maximise your returns by scouring the market for the card that best fits your spending patterns. The Barclaycard OnePulse with Cashback offers 5% back on any money spent on London Transport, while the Halifax Cashback Credit Card pays 1% cashback on fuel and groceries.
Tip: Using a credit card regularly and keeping up with repayments can actually help to boost your credit rating, which may help you get a better mortgage or loan rate in the future. Find out How Credit Cards Can Affect Your Mortgage Application with Confused.com.
The cons:
High interest rates: Interest rates charged on cashback cards are often high - American Express charges 18.9%. Any cashback benefits you have built up will be quickly eroded if you're not paying off your credit card bill in full each month.
Spend, spend, spend: While the idea of getting something for nothing is great, your spending levels do need to be quite high to rack up serious returns. On a card with a 0.5% cashback rate, spending 1,000 a month would deliver annual cashback of only 60. Ask yourself if this reward justifies the effort of ensuring you repay your bill in full each month, and the risk of the interest you will incur if you forget.
Risk of overspending: Credit card spending can be harder to keep track of than if the money is coming out of your current account, so it's important to make sure you do not overspend and run up a bill you can't repay. It's also important not to fall into the trap of purchasing things you wouldn't normally buy just to get cashback on them.
Minimum amount: Some cards will only pay cashback if you've earned more than a minimum amount, such as the American Express card, which will not make cashback payments of less thanandnbsp; 12.

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