Putting cashback credit cards to the test

Updated: 
We put the leading cashback credit cards to the test by seeing which card performs best in different scenarios.

Cashback credit cards are great. You can earn money back as you spend and the cashback rate can be as high as 6%!

The only real drawback is that most cashback cards now charge an annual fee, so you have to be confident that you'll earn enough cash to make a profit once the fee is paid.

It can also be hard to decide which card is best for you. So I thought I'd create three imaginary people and see which card is best for each of these folk. Hopefully that will help you with your own cashback choice.

But first, I'll just run through the basics on the four leading cards right now:

Barclaycard Cashback card
This card gives very generous cashback when you first sign up.

For the first three months you have the card, you can earn 6% cashback on your five largest purchases each month – up to a maximum of £120. You'll earn 0.5% on your remaining purchases.

After the introductory period, you'll get 2% cashback on your five largest monthly purchases plus 0.5% on the others. That's as long as you make at least 15 purchases each month. Plus the rate will double to 4% for one month each year to mark your anniversary with the card, although again only on your top five purchases.

On the downside, there's a £24 annual fee.

To get the most from this card, you need to spend a fair bit, and ideally a big chunk of your spending will be on a relatively small number of items each month. Then you'll get more from the 'five biggest items' cashback rate.

American Express Platinum card
The American Express Platinum Cashback card also has a special offer for the first three months you have the card. You can earn 5% on your spending up to a maximum of £100 cashback.

What's more, there's a flat cashback rate of 1.25% on all of your spending after that, regardless of how much you spend.

As with Barclaycard, there's an improved rate of 2.5% on your 'anniversary month' each year. However, you do need to spend £10,000 in the previous year to qualify for this 2.5% rate.

There's also a £25 annual fee.

Santander 123 card
The Santander 123 Credit Card pays you 1% on supermarket spending, 2% in department stores and 3% on petrol or train fares. There is a £24 yearly fee, though if you move your current account to the Santander 123 current account, there's no fee for the first year.

The card is great for people who spend a lot on petrol and at the supermarket.

Aqua reward card
The great thing about this card is that it doesn't charge a fee. It also offers a very generous 3% cashback rate.

However, the cashback is capped at £100 a year, so you'll only get a reward on your spending up to £3,333 each year.

Let's now move onto the scenarios:

1. Hard-working mum who is fairly affluent
This mum spends £9,200 a year in total on her card.

She has to drive to work so she spends a lot on petrol and she also does a lot of shopping for her family at the supermarket.

Here is how much she spends on her credit card each year:

- £3,000 a year on petrol (£250 a month)

- £600 in department stores (includes John Lewis, Debenhams, Harrods, BHS and Fenwick) (£50 a month)

- £4,200 at supermarkets (£350 a month)

- £1,400 on other credit card spending (£117 a month)

- £4,200 on her five biggest purchases each month (£350 a month)

Here is how much cashback this mum gets with the different cards:

Cashback rates for hard-working mum

Card

Year one cashback (month/year)

Year two cashback (month/year)

Annual Fee

Year one profit

(month/year)

Year two profit

(month/year)

Santander 123 Credit Card

£12/£144

£12/£144

£24

£10/£120

£10/£120

American Express Platinum Cashback

£15.52/£186.20

£9.58/£115

£25

£13.43/£161.20

£7.50/£90

Barclaycard Cashback Visa

£12.58/£151

£9.66/£116

£24

£10.58/£127

£7.66/£92

Aqua reward card

£8.33/£100

£8.33/100

£0

£8.33/£100

£8.33/100



I've worked out figures for year one and year two because the mum can get extra cashback in year one with Barclaycard and American Express thanks to their introductory special deals.

So in the first year, 'mum' would get the most cashback from American Express thanks to the very generous 5% rate in the first three months. Barclaycard comes second and Santander is in third position.

But from the second year onwards, the Santander 123 card is clearly top. That's mainly thanks to the generous 3% cashback rate on supermarket shopping.

Aqua only pays £100 because that is the cashback limit for the year.

Year one winner: American Express Platinum Cashback

Year two winner: Santander 123 card

2. Big-spending executive
This big-spending executive spends as follows on her card each year:

- £3,600 on train travel

- £3600 in department stores (£300 a month)

- £3,600 at supermarkets (£250 a month)

- £10,800 in other spending (£900 a month)

- £10,800 on five biggest monthly purchases (£900 a month)

- Total: £21,600 (£1800 a month)

Card

Year one cashback (month/year)

Year two cashback

(month/year)

Annual fee

Year one profit

(month/year)

Year two profit

(month/year)

Santander 123 Credit card

£15.75/£189

£15.75/£189

£24

£13.75/£165

£13.75/£165

American Express Platinum Cashback

£39.38/£472.50

£24.38/£292.50

£25

£37.29/£447.50

£22.29/£267.50

Barclaycard Cashback Visa

£31.50/£378

£24/£288

£24

£29.50/£354

£22/£264

Aqua Reward card

£8.33/£100

£8.33/£100

£0

£8.33/£100

£8.33/£100


American Express clearly wins in year one thanks to its 5% introductory deal. In year two, American Express just pips Barclaycard.

If our big spender had just concentrated a bit more of her spending into her five biggest monthly spends, then Barclaycard would have won.

It's also worth noting that I've assumed that the big spender spends exactly the same amount each month. In reality, she might try to spend more in her 'anniversary month' to benefit more from that month's bonus rate (4% with Barclaycard, 2.5% with Amex). So that would boost Barclaycard and American Express's lead over Santander.

Santander's numbers would look better if the big spender spent a greater proportion of her income at the supermarket, or even better, at department stores.

Winner: American Express Platinum Cashback

3. Fairly low spender
Our low spender spends as follows each year:

- £1,500 on petrol (£125 a month)

- £300 at department stores (£25 a month)

- £2,000 at supermarkets (£166.66 a month)

- £1,000 on other spending (£83.33 a month)

Total spending: £4,800

Card

Year one cashback

(month/year)

Year two cashback

(month/year)

Annual fee

Year one profit

(month/year)

Year two profit

(month/year)

Santander 123 card

£5.92/£71

£5.92/£71

£24

£3.83/£46

£3.83/£46

American Express Platinum Cashback

£8.75/£105

£5/£60

£25

£6.66/£80

£2.92/£35

Barclaycard Cashback

£6.17/£74

£4.78/£57.33

£25

£4.17/£50

£2.78/£33.33

Aqua Reward

£8.33/£100

£8.33/£100

£0

£8.33/£100

£8.33/£100


In the low spender category, Aqua is the clear winner. 3% cashback and no fee is an unbeatable combination if you don't spend that much on a credit card.

Winner: Aqua Reward card

Be careful!
So hopefully this will help pick the right cashback card for you. Just remember that you must pay off your in bill full every month. If you don't do that, you'll be hit by interest charges that will easily outweigh any cashback that you may earn.

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