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Today I’ve got a guest post for you from the fantastic Faith Archer. Faith is a money journalist who also writes the blog Much More With Less about moving to the country, living on less and making the most of it. Personally I love reading Faith’s posts as they are factual, interesting and Faith is a wonderful person too! Today you can find out how to earn free money with a cashback credit card.
Want to get paid to spend? Try a cashback credit card
The good news is that you’ll get paid a tiny bit of money back on all your shopping. That’s free money on cash you’d spend anyway. The bad news is that just like any credit card, you’ll still need to pay it back. Shame!
When it’s great to use a cashback credit card
I’ve been using a cashback credit card for years. It was great when I had a lot of travel expenses for my job, and could pay for it all on a credit card, earn the cashback, and then get reimbursed.
Even now I have a family, work from home and spend a lot less, I still earnt £95 cashback last year. The extra cash came in really handy just before Christmas, to pay towards the presents.
I use my cashback credit card for virtually all our family spending – food, petrol, clothes, subscriptions, any treats or tickets. That way, we earn as much cashback as possible.
There’s a range of different cashback credit cards out there. Personally, I like to keep things simple. I already had a current account with Nationwide, so I was able to apply for a Nationwide Select cashback credit card, which pays cashback of 0.5% with no annual fee and no commission on spending abroad.
Cashback at 0.5% might sound like a tiny amount, but it does add up.
I worked out last year that by using a combination of a cashback credit card, shopping via cashback websites, using loyalty cards, supermarket cashback apps and a cashback current account I earned more than £625 on money I would have spent anyway. You can read more about ways that I saved money in 2016.
When it’s not so great to use a cashback credit card
The only time I don’t use a cashback credit card is if I’m buying something like train tickets or flights, where the seller whacks on a fee for using a credit card. In that case, the fee is usually more than any cashback, so it’s just not worth it.
If having a credit card is likely to make you go wild in the aisles and spend more than you can afford, it’s best to steer well clear. The interest on money left on your card can mount up really fast. However, if you can spend a bit, and pay off the whole lot every month, then using any kind of credit card will help build up a your credit score, which in turn will help if you need to borrow in future. If you choose a cashback card, you’ll also be able to earn a little bit of extra cash.
10 golden rules for cashback credit cards
So if you want to be quids in rather than making an expensive mistake, here are the 10 golden rules for cashback credit cards:
- Always pay off your balance in full, or you’ll face expensive interest charges that cost more than the cashback you earn. Can’t pay it off each month? Choose a different kind of credit card.
- Set up a direct debit to pay the whole balance each month. That way, you can’t forget, and won’t get hit with interest charges.
- Don’t spend money just for the cashback, if you can’t afford to pay it back.
- Always keep within your credit limit, or you’ll pay more in fees and charges than you earn in cashback.
- Huge percentage cashback? Check if you also have to pay a huge fee every year. Might still be worth it if you spend a lot (and pay it all off). Not worth it if you won’t earn large amounts of cashback.
- Use a comparison website to find the best deal. Try sites like Moneyfacts or Go Compare.
- Check out the rewards on offer. I prefer cold, hard cash, but you can also earn other things like Nectar points, Tesco clubcard points, ASDA vouchers, Amazon vouchers and Avios (like air miles). Just search for “reward credit cards” rather than “cashback credit cards”.
- Watch out for the small print. Some cards only pay generous cashback for the first few months, limit the amount you can earn, insist you pay more than a certain amount each year to qualify and refuse to pay cashback in months where you don’t make the minimum payment. (Hard stare at American Express for lots of terms and conditions)
- Don’t apply for lots of credit cards just before you need to apply for credit for something really important, like a mortgage or car.
- If you want to apply for a new credit card, take a quick look at cashback sites like Quidco and TopCashback first. See if you can get paid a wodge of cash just for applying via a cashback website. It’s less likely on the small number of cashback cards, but always worth checking!