Cashback credit cards give you money back with every purchase, but not everyone uses them to their full potential. Here are a few surprising but simple tips for maximising cashback on your credit card.
Discover which credit cards you could be eligible for now
Use our free Credit Card Eligibility Checker to discover which credit cards you may be eligible for. It only takes a few minutes and will not affect your credit score!
How do cashback credit cards work?
Cashback is a method of earning money when you make purchases. When you buy something using a credit card that offers cashback, a percentage of the cost is refunded to you. For example, if your card offers 1% cashback and you spend £100 in a shop, you will receive £1 back.
Cashback can be given on specific items, at specific shops, or on everything you buy.
Usually, cashback is paid annually, though there are some cards that will pay cashback monthly.
What are some ways of maximising cashback on my credit card?
1. Review the terms and conditions
Credit cards come with different terms and conditions. Make sure you read these terms and conditions before you take one out.
Some cards may only offer cashback if you shop at specific participating stores. If you do not shop at these locations, the card will be of little use to you.
In addition, some cards may only give you cashback once you reach a minimum monthly spending limit.
2. Find a card that offers cashback on your biggest spending
Begin by going over your budget or spending patterns and establishing the categories that you spend the most money in. This could be groceries, outdoor dining, fuel or something else.
To maximise your cashback, look for a credit card that offers the highest cashback or a cashback bonus on these major spending categories.
3. Use multiple cards
While juggling more than one credit card could complicate your personal financial planning, it could make maximising cashback easier.
Could you be rewarded for your everyday spending?
Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.
For example, you could get one card that gives you bonus cashback on everyday groceries and another that gives you bonus cashback on fuel. By examining your budget and goals, you can figure out the card combination that will work best for you.
If managing multiple credit cards at the same time appears to be too much for you, consider getting one that offers bonuses or higher cashback in two or more categories where you spend a lot of money.
4. Shop smartly
If you choose a card that gives you a high amount of cashback on fuel or on bills, try to use your card every time for this particular expense instead of using cash or your debit card.
If you go for a card that offers higher cashback when you shop online, try to make the majority of your purchases online rather than in store to maximise the amount of cashback you can get from the credit card.
5. Sign up for extra earning opportunities
Some credit cards have limited-time offers to earn bonus cashback. Do your homework and try to find a card with a good sign-up bonus to maximise your cashback.
That being said, there may be a minimum spending requirement, so before you take out the card, make sure that this minimum spending requirement is one you can meet.
Cashback is a simple and easy way to put some of the money you spend on your credit card back into your pocket. If you are in the market for a cashback credit card, take a look at our comparison of the top-rated cashback credit cards in the UK.
Finally, remember the golden rule of cashback credit cards: always pay off your balance in full each month. Otherwise, the money you earn in cashback will be eroded by interest charges.
Try to avoid going above and beyond in your spending just to get more cashback. You may then find it difficult to pay off your balances.
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.