The best credit cards that reward you for spending
So long as you clear your card balance in full every month, then you are getting something for nothing. In fact, putting all of your usual monthly spending on the card is an excellent way to maximise those returns and get even more significant rewards.
Of course, if you fail to clear the balance in full every month, then rewards cards are not such a good choice – the interest you’ll have to pay on your outstanding balance will swiftly erode the benefits you have built up.
Why rewards cards are disappearing
The rewards card market is not quite as bountiful as it once was however. Just this week for example MBNA announced it will be closing two of its American Express rewards cards next month, affecting 75,000 existing card holders (these cards have been closed to new customers since 2015).
In the last few years, a succession of rewards cards have been pulled or at least amended to be far less attractive. That’s all down to the EU introducing a cap on interchange rates back in 2015. This is the fee that retailers pay to card providers when customers pay using their cards; the cap has reduced the amount card providers make from purchases, which they argue has made it less affordable to offer such generous rewards cards.
The cap doesn’t apply to American Express cards issued by American Express, but it does apply to American Express cards issued by other providers, such as the MBNA cards.
The best replacement rewards cards
Given their exemption from the cap, American Express’s own cards are well worth a look as they are generally the most generous, though it’s important to bear in mind that many retailers don’t accept the cards, which will limit the rewards you can build up.
For example, the American Express Platinum Cashback Everyday card offers 5% cashback in the first three months (capped at £100), followed by 0.5%-1% cashback on all future spending, depending on how much you use it. Best of all, there’s no annual fee to worry about.
If you’re a bigger spender, then you may be better off with the American Express Platinum card, which also pays 5% in the first three months (with a higher cap of £125), followed by up to 1.25% depending on how much you spend. There is a £25 annual fee to consider though.
If reward schemes are more your thing, then it really comes down to which points scheme you find the most appealing.