Credit card rewards top £70 billion in 2022! Are you missing out?

Credit card rewards are booming, from cashback to cheap flights. Jo Groves takes a look at some of the attractive reward schemes currently on offer.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A stack of credit cards

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

According to Jupiter Research, global consumer credit card rewards will hit $92 billion (£71 billion) in 2022. And they’re forecast to rise by 15% a year as consumers opt for single reward-based schemes over multiple loyalty apps.

There’s a host of different credit card rewards to pick from, including cashback, retail vouchers, hotel status upgrades and Avios flights. I’m going to look at some of the more tempting credit card rewards currently on offer, along with other tips for choosing a credit card.


What are the most popular rewards schemes?

1. Cashback reward schemes

Unsurprisingly, these credit cards offer you cashback on your purchases. The cashback rate’s typically around 5% for the initial promotional period, followed by an ongoing rate of 0.25%-1.25%.

We’ve compiled a list of our top-rated cashback credit cards to help you compare the various options. The American Express Platinum Cashback Everyday Credit Card might be a good option for bigger spenders, offering 1% cashback on spending over £10,000 in a year (and 0.5% under £10,000). The card also has no annual fee.

An even higher cashback option is the American Express Platinum Cashback Credit Card, offering 0.75% cashback (on spending under £10,000) and 1.25% cashback (on spending over £10,000) for a £25 annual fee.

As American Express isn’t accepted universally, other options include 0.5% cashback on the Santander All In One Credit Card and 0.25% cashback on the Barclays Rewards credit card.

2. Loyalty reward schemes

A number of credit cards offer loyalty vouchers or points, including Tesco, Sainsbury’s, John Lewis and Marks & Spencer.

The M&S Shopping Plus Credit Card offers one point for every £1 spent in M&S and £5 spent elsewhere. This works out at an equivalent ‘cashback’ rate of 0.2%-1.0% as each point is worth 1p in vouchers.

I have a John Lewis Partnership Credit Card that awards five points for every £4 spent at John Lewis and Waitrose and one point for every £4 spent elsewhere. Each point is also worth a 1p in vouchers, so this equates to a cashback rate of 1.25% at John Lewis and Waitrose and 0.25% elsewhere.

3. Avios and hotel reward schemes

American Express offers two credit cards with perks for British Airways customers. I use a British Airways American Express Premium Plus card for the majority of my spending. Although it has a fairly steep £250 annual fee, I earn 1.5 Avios points per £1 spent (and three Avios for BA purchases).

For me, the main advantage is earning a companion voucher if I spend over £10,000 in a year. This enables me to book two airmiles flights (in any class) for the price of one.

Alternatively, the Marriott Bonvoy American Express is a hotel-based rewards card that offers privileges such as an upgrade to Gold Elite status.

Are rewards-based credit cards a good option?

Rewards-based credit cards are most appropriate for people able to pay their credit card balances in full each month. But it’s also worth looking at other factors such as the annual fee.

Another important consideration is whether you intend to use your credit card abroad. My BA Amex card is typical in charging a 2.99% ‘non-sterling transaction fee’ when I use the card overseas. If I’m paying for hotels and meals, this can add up.

To avoid this, I also have a Halifax Clarity Credit Card for purchases in foreign currencies. It has no annual fee and no foreign currency charges, but it offers no other rewards, so I only use it outside the UK.

What if you have a bad credit rating?

It can be challenging to apply for a credit card if you have bad, or no, credit. However, we’ve compiled a list of our top-rated credit cards for bad credit to help with this. We’ve also set out eight tips to help you apply for a credit card, including ways to improve your credit score.

1. Balance transfer credit cards

If you have outstanding credit card debt, we’ve selected our top-rated balance transfer credit cards. These cards typically offer 0% interest on balance transfers for at least a two-year period. This could provide the time to clear your debt without incurring extra interest charges.

2. 0% purchase credit cards

These credit cards offer a 0% interest rate on new purchases for an initial period, typically one to two years. They could be an option for people looking to spread the cost of a larger purchase without incurring interest payments. Our experts have researched the market to produce a list of top-rated 0% purchase credit cards.


Take away

There’s a wide range of credit cards on offer. If you have no outstanding credit card debt, rewards-based credit cards can be a good way of earning different types of rewards on your everyday spending.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »