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Getting the Most from Your Rewards Credit Card

£500 billion is spent on plastic each year but well over 80% of that doesn't earn rewards. If you pay off your credit card balance in full each month you could be bagging £100s of rewards every year with virtually no effort with a rewards credit card. Find out how below.

What is a Rewards Card?

Every time you purchase something with a rewards credit card the credit card company will give you rewards points. You can then use these points to buy a whole host of things from flights to toilet roll to annual theme park passes, depending on the individual rewards scheme. The credit card companies aren’t just being generous. They’re hoping that you will be attracted to use their card because of the rewards but then not clear your balance in full. They can then pocket far more in interest than you will receive in rewards. So, only use a rewards card if you know you can clear the balance in full each month.

Should I Get a Rewards Credit Card?

Get a rewards credit card if

  • You can repay your credit card balance in full each month.

  • You want to earn points for a specific purpose, such as flights or supermarket rewards. Otherwise a cashback card gives you more flexibility when it comes to spending your rewards.

Don’t get a rewards credit card if

  • You are planning some big purchases and will not be able to clear your balance in full. Go for a 0% purchase card instead.

  • You are paying interest on existing credit card debt. You’ll make far more money if you move your existing credit card debt to a 0% balance transfer card than you will with a rewards credit card.

Which Rewards Credit Card is for Me?

The best reward card for you is the one that will deliver you the biggest value of rewards per pounds spent on it _and _that will accept you. Some of these cards have tight acceptance criteria. Use our personalised credit comparison tool to quickly understand which reward credit card is likely to bring you the biggest bang for your spending buck, and your highest chances of acceptance.

Cash is King

The simplicity and return on spending means that cashback cards are the best choice for most people. You spend money, and your credit card provider gives you cash. With returns of up to 5% for the first three months available, followed by up to 1.25% for the rest of the year you could earn a hundreds of pounds in cash by putting your spending on a cashback card. Just as importantly, cash is universal; points are only as valuable as the company running the program allows them to be. There’s nothing to stop your hard-earned points being devalued whenever the provider decides. For that reason, we think for most people there’s not much point in looking past cashback right now. Find out more about cashback cards with our complete guide.

Points Mean Prizes

If you’re opting for a rewards card rather than cashback you’ll need your wits about you to get the most from it. Each card gives a different amount of points per pound spent and points are not equivalent in value, so it pays to learn exactly how you’ll earn points – including whether you get more points in some retailers than others. You can then shape your shopping around the rules to earn the most points. Sadly, many schemes willfully set out to make it hard to understand the value you’ll earn. Usually a sign that the value’s not great. Our rewards card calculator will tell you how much you'll earn in rewards on each card, in pounds.

The Three Types of Reward Card

1: The price of freedom

The most common rewards cards let you exchange your points for treats. The way to assess how good these cards are is not to look just at the value of what you will be able to buy, but what you will be able to buy as well. For people with diverse tastes it will be advantageous to not be tied to one retailer. Most reward schemes allow you to spend your points at a wide array of places but often this will mean you get less value from your points. Our comparison tool shows you the pound value of the points you could earn with each rewards scheme making it much easier to decide which one is best for you.

2: Loyalty pays

If you’re loyal to certain stores, in particular supermarkets, then rewards tied to these shops might be a better option for you. The cards often return more reward value per pound on spending. For example, the Tesco Clubcard credit card gives you points for when you spend anywhere, but the points reward rises when you spend at Tesco or at a Tesco petrol station. So you can really rack up points quite quickly if you do your weekly shop at Tesco. However, the points aren't worth as much in-store as they are with selected Tesco Clubcard partners.

3: Airmiles are flying high

Frequent fliers can often earn more with an airmiles credit card than with cashback or other rewards cards. But you are tied to only spending your points on flights, and those flights can be very hard to come by. There is also another BIG drawback with airmiles cards. Most flight reward schemes only allow certain flights to be booked with points, usually those that they’d struggle to sell. So, if you are hoping to go on a free trip you might really struggle to get free flights – especially if you are hoping for a long-haul trip. A recent investigation into the British Airways Avios scheme found that someone wanting to fly to Australia using Avios (their airmiles points) to pay would have to fly out in August and back in October – they were the only two flights available ALL year. The situation is better on short-haul flights but it can still be very tricky. So, airmiles only really beat other cards if you are prepared to spend some time researching how best to spend them, and then use them very wisely.

Will I Be Accepted for a Rewards Card?

Used correctly rewards cards can give away a lot of value, which reduces the profit for the credit card company. That means they don’t want to give out too many cards, so acceptance criteria for the best rewards cards can be pretty tight. Since every lender has different acceptance criteria, it’s hard to know where to apply. Enter a few details and our advanced credit matching technology shows you the rewards cards you’re more likely to be approved for. Whilst acceptance still isn’t guaranteed, by applying for cards that we recommend, you are over 250% more likely to be accepted than those not using the tool. Being rejected is not only a waste of time; it can actually damage your credit rating.

Golden Rule for Rewards Cards

  • For all rewards cards, the absolute KEY to using them is to avoid borrowing in a way that means you can't pay off your balance in full at the end of the month. If it’s borrowing you need, there are much, MUCH better 0% purchase cards. Borrow with a rewards card and interest will quickly gobble up any rewards gains you’ve made.

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TotallyMoney is an independent credit broker, not a lender. Our comparison service works with most leading lenders, covering the majority of the market. Though we may be paid a fee by lenders or brokers this never influences how our products are ranked.

We don't provide financial advice. Product information is obtained from independent sources and rates displayed may vary depending on your personal circumstances. While we make every effort to ensure that information is up to date, you should always confirm the terms of the offer with the product provider.

TotallyMoney is owned and operated by TotallyMoney Limited which is registered in England and Wales (Company Registration Number 06205695). TotallyMoney Limited is an Appointed Representative of TM Connect Limited, which is registered in England and Wales (Company Registration Number 06967012) and authorised and regulated by the Financial Conduct Authority in respect of consumer credit related activities (FCA FRN: 511936). Registered Office: Chapter House, 16 Brunswick Place, London N1 6DZ. Credit is available, subject to status, only to UK residents aged 18 or over.

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