Compare Cash Back Credit Cards: Your Ultimate UK Guide (2023-2024)

Cash back credit cards have become increasingly popular in the UK, offering a tangible reward for everyday spending. Instead of collecting points or air miles, these cards give you a direct percentage back on your purchases, typically as a statement credit or a cash deposit. But with a plethora of options available, how do you compare cash back credit cards effectively and find the one that best suits your needs? This comprehensive guide will walk you through everything you need to know, providing UK-specific insights and practical advice to help you make an informed decision in 2023 and beyond.

Understanding Cash Back Credit Cards

Before diving into specific card options, it's crucial to understand the mechanics of cash back credit cards. Unlike rewards programs that might lock you into certain purchases or redemption options, cash back offers a simple and flexible benefit. It's essentially a discount on everything you buy, as long as you pay your balance in full each month.

How Cash Back Works

Most cash back credit cards offer a percentage of your spending back as cash. This percentage varies considerably, with some offering as little as 0.25% and others reaching 5% or even more on specific categories or during introductory periods. Typically, you will either receive the cash back as a credit on your account, a direct bank deposit, or as a redeemable statement credit. The method depends on the individual card’s terms and conditions.

Types of Cash Back Rewards

Flat-rate cash back: This is the simplest form, where you earn the same percentage back on all purchases. For example, a 1% cash back card will give you £1 back for every £100 spent.
Tiered cash back: These cards offer different rates depending on the spending category. For instance, you might earn 2% on groceries, 1% on fuel, and 0.5% on everything else.
Introductory cash back bonuses: Many cards offer a higher cash back rate or a lump sum bonus after spending a certain amount within the first few months of opening the account. These offers often include a higher percentage of cash back up to a maximum amount of spend and is designed to entice new customers.
Rotating category cash back: Some cards rotate the categories that qualify for higher cash back rates quarterly or annually, such as a bonus rate for spending on travel for three months of the year, followed by a bonus rate for spending on groceries the next three months.

Why Choose Cash Back Over Other Rewards?

Cash back provides unparalleled flexibility and simplicity. Unlike travel or points-based rewards, cash back can be used for anything you want. If you are good at managing your spending and are diligent with paying your bills on time, this straightforward approach can really add up over time. You are not constrained by limited redemption options and you don't have to spend time trying to find the optimal usage of your rewards. You get money back directly, which is a pretty compelling benefit. This is why many consumers now compare cash back credit cards before choosing their rewards system of choice.

Factors to Consider When Comparing Cash Back Credit Cards

When you compare cash back credit cards, several factors come into play. It’s not just about the headline cash back rate, but the overall cost and suitability for your financial habits.

Cash Back Percentage & Limits

Headline rate: What percentage will you earn on your spending? This will typically be a major deciding factor, but consider that it could be higher on an introductory offer than the ongoing rate.
Maximum cash back: Does the card have a maximum annual or monthly cash back limit? If you spend a considerable amount, you might reach this cap, reducing the overall value of the card.
Tiered rate categories: Understand what qualifies for the higher rates if the card uses tiered rewards. If the spending categories don't match your typical outgoings, you might be better with a flat-rate card.

Annual Fees

Many cash back credit cards come with annual fees. It's vital to weigh the cost of the annual fee against the potential cash back you could earn. A high-fee card is only worthwhile if your spending significantly exceeds that of the average consumer and your rewards easily outweigh the expense. If you are going to only use the card for a few purchases each month, a high annual fee may eliminate all of the benefits. It's often better to opt for a lower, or no, annual fee card if you are a light spender and/or you're not spending in the bonus rate categories.

Introductory Offers

Many cards tempt you with introductory cash back rates or bonuses. These can be attractive, but always look at the ongoing rate after the introductory period ends. Ask yourself if the ongoing rate is still competitive when you compare cash back credit cards long term.

Other Benefits

Some cash back cards offer additional benefits like travel insurance, purchase protection, or access to exclusive deals. Consider these additional perks when you compare cash back credit cards, as they might add value for your needs and circumstances. For instance, does the card include purchase protection against loss or damage? Or does it offer some sort of travel accident insurance? These extras can be of particular value.

Credit Score and Eligibility

Not all cash back cards are available to everyone. Credit providers will check your credit score and history before deciding if you are eligible to get their card.

Credit score: Generally, you will need a "good" or "excellent" credit score to qualify for the best cash back cards with higher rates and perks. Check your credit score via the free credit report services such as Experian, Equifax and TransUnion. According to research from 2023, the average credit score in the UK is around 730 out of a maximum of 999. Most major card issuers will prefer you to be above the average range.
Income: Banks will also assess your income and ability to repay the balance on time. If you have a history of late payments, or a low income, it is unlikely you will qualify for a better cash back credit card.
Payment history: A history of paying credit card balances on time is essential. Consistent payment behaviour will be viewed as responsible by credit providers, and is considered a very strong sign that you will continue to make payments on time and in full.
Existing credit: How much credit do you already have and what is your total credit utilisation? Banks will be interested to see that you aren’t highly indebted, as they may perceive this to be too risky to offer another credit card to you. They would also want to confirm you’re not taking out multiple credit cards at once.

UK-Specific Considerations

The UK credit card market is quite competitive, and providers often offer slightly different terms and conditions than elsewhere. It's important to look for cards that are tailored to UK residents, and to look at their terms and conditions for local specifics. Here are some things to consider in the UK market:

Contactless Payments: Most UK cards offer contactless payments, but it's worth confirming this, particularly if you prefer this method.
Currency Exchange Fees: If you travel a lot, look at the foreign transaction fees of your card. Some cards are specifically designed for international use.
Card Provider Reputation: Opt for a reputable provider with good customer service and a secure online platform. Check reviews on websites such as Trustpilot and make sure that they are a reputable provider with strong customer reviews.

Comparing Specific Cash Back Credit Cards in the UK (2023-2024)

Here’s a snapshot of some of the cash back cards available in the UK and how they stack up against each other in 2023-2024. Please note that rates and terms are subject to change and you should always check the most up-to-date information on the providers’ websites.

Santander All in One Credit Card

Headline rate: 0.5% cash back on all spend.
Annual fee: £3.
Pros: Simple, flat-rate cash back.
Cons: Lower cash back rate compared to some other cards.
Who is it for? This card is often better for those who like a simple flat cash back approach.
Credit Score: The card is aimed at a wide range of customers, but a good credit history is usually required for approval.

American Express Platinum Cashback Everyday Credit Card

Headline rate: Up to 5% cash back on all purchases for the first three months (up to £100), then 0.5%-1% cash back.
Annual fee: £25.
Pros: High introductory rate, no annual fee in the first year.
Cons: Fee after the first year, lower cash back rate ongoing.
Who is it for? This card can be ideal for those looking to maximise rewards in the first year, and who are confident that they can spend within the requirements of the introductory period to get the £100 rebate.
Credit Score: A good or excellent credit score will be usually be required for approval.

Barclaycard Rewards Credit Card

Headline rate: 0.25% cash back on all purchases.
Annual fee: £0.
Pros: No annual fee.
Cons: Lower cash back rate compared to many other options.
Who is it for? This card is good for those who want a simple, no-frills cash back option.
Credit Score: Barclaycard is considered a more accessible credit card provider for those with a moderate credit history.

NatWest Reward Credit Card

Headline rate: 1% cash back on purchases made with the card when you shop at participating partner retailers.
Annual fee: £24.
Pros: Can have a high earning potential if you spend at their partner retailers.
Cons: Can have high annual fee, and restricted earning potential if you don’t spend at partner retailers.
Who is it for? This card is most suitable for customers who regularly shop at their partner retail stores.
Credit Score: A good credit history will be required to gain approval.

Tesco Clubcard Credit Card

Headline rate: Points on purchases which can be converted to cash or spent at Tesco.
Annual fee: £0.
Pros: No annual fee, and a good way to accumulate points and vouchers.
Cons: Rewards may be less advantageous if you do not spend at Tesco.
Who is it for? This card is for those who regularly shop at Tesco.
Credit Score: A good or excellent credit score is usually required to gain approval.

Important Note: These are just examples and the market is constantly changing. Always compare cash back credit cards thoroughly, considering your specific financial situation and spending habits.

Maximising Your Cash Back Rewards

Once you've chosen your cash back credit card, here’s how to maximise your earnings:

Pay your balance in full: Avoid interest charges by paying your full balance on time each month. Interest will easily negate any cash back you have earned.
Use the card for all eligible spending: Try to use your chosen credit card for all everyday purchases to maximise rewards, especially at the increased earning categories if your card is tiered.
Track your spending: Monitor your spending to ensure you’re not overspending just to earn cash back.
Be aware of any restrictions: Look out for any restrictions on the cash back categories and redemption options, and plan ahead to ensure you benefit.
Be aware of the annual fee: Be aware of the renewal date for any annual fee so that you are not caught out.
Review your card annually: Re-evaluate your card every year to ensure it’s still the best option. Compare cash back credit cards at least once a year.

The Importance of Responsible Credit Card Use

While cash back credit cards offer many benefits, it's crucial to use them responsibly. Credit cards, if mismanaged, can lead to debt problems and affect your credit score. Here are some vital tips:

Never spend more than you can afford to pay back.
Always pay your full balance on time to avoid interest charges.
Avoid taking out multiple credit cards at the same time.
Only use credit for essential purchases or for purchases you know you can afford to pay for.
If you are struggling with debt, seek professional help.

UK Credit Card Market Statistics (2023-2024)

Here are some key UK credit card market statistics from 2023-2024:

Total credit card debt in the UK: According to a report by Money.co.uk in September 2023, the average person in the UK holds approximately £2,000 in credit card debt.
Percentage of people owning a credit card: Statista report a figure of over 70% of adults in the UK own at least one credit card.
Popularity of cash back cards: While specific figures on cash back cards alone are hard to come by, MoneySavingExpert reports that cash back credit cards consistently feature among their most popular credit card recommendations, which underlines the popularity of this type of rewards system.
Average rewards rate: The average cash back reward rate for the most popular UK credit cards ranges between 0.5% and 2% for flat-rate cards.
Annual fees: The average annual fee for a premium rewards credit card in the UK is approximately £75. Many basic cash back credit cards offer a £0 annual fee.

These figures highlight the importance of comparing cards carefully and choosing a card that aligns with your financial circumstances.

Conclusion

Choosing the right cash back credit card requires careful consideration of your spending habits, financial situation, and overall needs. The UK market offers a variety of options, from basic, no-fee cards to premium cards with enhanced rewards and perks. The key is to compare cash back credit cards thoroughly, focusing on the cash back rate, annual fees, and any other benefits the card offers. Remember that responsible credit card use is paramount and you should always pay your balance in full every month to avoid interest charges and any negative impact on your credit score. By taking the time to evaluate all options, you can find the perfect cash back credit card to reward your everyday spending and enhance your financial strategy in 2023-2024 and beyond.