Cashback on dining out?

McDonald'sThe 123 cashback credit card from Santander will be paying cashback on even more spending for the summer.

The 123 cashback credit card from Santander has got better for the summer, with cashback now paid at all major bars and restaurants.
The 123 card pays a rate of either 1%, 2% or 3% cashback, depending on where you spend your money.

The 1% cashback rate already applies to any money spent with supermarkets, whether online or in-store. However, it now includes major bars and restaurants, until the end of September.

What counts as a 'major' bar or restaurant?
Santander has put together a pretty exhaustive list of major bars and restaurants. I've highlighted some of the more common outlets below:
  • All Bar One
  • Angus Steak House
  • Apostrophe
  • ASK
  • Beefeater
  • Bella Italia
  • Brewers Fayre
  • Browns
  • Burger King
  • Saffe Nero
  • Caffe Uno
  • Chiquito
  • Domino's
  • Eat
  • Frankie & Benny's
  • Fuller's Inn
  • Garfunkels
  • Gourmet Burger
  • Harry Ramsden
  • Harvester
  • KFC
  • La Tasca
  • Loch Fyne
  • Little Chef
  • McDonalds
  • Nandos
  • Papa John's
  • Pitcher & Piano
  • Prezzo
  • Pizza Express
  • Pret A Manger
  • Revolution
  • Slug & Lettuce
  • Starbucks
  • Subway
  • TGI Fridays
  • TigerTiger
  • Toby Carvery
  • Wagamama
  • Wetherspoons
  • Yates's
  • Yo Shushi
  • Zizzi
Where else you can collect cashback
With the 123 credit card you enjoy a rate of 2% cashback on money spent at department stores, places like John Lewis, Debenhams, BHS and House of Fraser. And there's a rate of 3% cashback on your petrol spending (though this is capped at a £300 per month spend).

It's important to bear in mind that there's an annual fee of £24 which will dent the cashback you earn. However, should you take out the 123 current account as well – which pays cashback on certain bills you pay by direct debit – that fee is waived.

How it compares
The Santander 123 credit card is just one of a number of cards that offer you cashback on the money you spend. Here are some of the others that are worth a look.

American Express Platinum Cashback card
The American Express Platinum Cashback card pays a rate of a whopping 5% over the first three months, capped at £100. After that you enjoy a flat rate of 1.25% cashback on the money you spend, which makes it a little easier to work out how much cashback you can expect at the end of the year.

However, this card has an additional sales feature – a loyalty bonus. When you reach your anniversary month of taking out the card, so long as you have spent more than £10,000 on the card, the cashback rate is doubled for that month to 2.5%.

The big downside of course is that American Express is not accepted everywhere, which limits the amount of cashback you can expect to make. There's also an annual fee of £25 which will take a chunk out of your cashback.

Capital One Aspire World
The Capital One Aspire World card also offers 5% cashback during the first three months, capped at £100. After that, a tiered rate of cashback applies, depending on how much you spend.

Spend up to £6,000 and you'll earn 0.5% cashback. If you spend between £6,000 and £9,999 you'll get 1% cashback, while the top rate of 1.25% is all yours should you spend more than £10,000.

Unlike both the American Express and Santander cards, there's no annual fee to worry about – all of the cashback you earn goes directly into your pocket!

Aqua Reward card
A new entrant to the cashback credit card market comes from Aqua with its Reward card.

What's unusual about this is that Aqua is a lender which targets borrowers with poor credit histories, offering them credit builder cards to help them improve their credit image. The Reward card does just that – you have a small initial credit limit of between £250 and £1,600, with text message reminders when bills are due.

While you earn 3% on the money you spend, wherever you spend it, there is a cap of £100 cashback.

What is good about this card is that it allows even people who are rebuilding their credit record to be rewarded for managing their credit card properly. However, I'm still a little concerned that it may encourage borrowers to spend more than they can afford to pay off, even with the small credit limits.

Getting the most from your cashback card
It's a little tricky to compare these cards on a generic basis, particularly the Santander 123 card, as it rewards different spending in different ways. You'll need to work out for yourself exactly which card best suits your own spending habits.

However, there are a couple of ways to ensure you get the maximum return from your cashback card. The first is to put as much of your monthly spend on the card as possible - grocery shopping, travel costs, absolutely everything that you usually spend money on, buy it with the cashback card.

This is not the cue to increase how much you spend – there's no point spending more than you can afford to pay off, just for the sake of extra cashback.

That takes me to my second tip – make sure you pay off your bill, in full, each month. Cashback cards are really not a great option for people that sometimes only pay off the minimum, or even most, of their credit card bill. If you don't clear the whole balance in one go, the interest on your outstanding balance will further dent the cashback you're earning.

A couple of months like that and the whole exercise will have been a waste of time!

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