FANTASTIC PLASTIC
Best credit cards for freebies including free flights, cashback and perks
We reveal which cards let you get free cabin upgrades among other perks
FREEBIES and deals are a great way to boost your finances, and a growing number of credit cards offer perks just for spending.
From cashback to vouchers and air miles, make sure you are not missing out.
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The number of rewards credit cards on the market is on the rise. These cards reward you for using them every time you shop.
These could be air miles to save money on your next flight, points you can exchange for vouchers or, perhaps best of all, cold, hard cash.
With 58 rewards and credit cards on the market, according to data site Moneyfacts, there is bound to be one that will suit you.
“My tip is to get a credit card that will give you rewards for the way you spend already,” said Kara Gammell, personal finance expert at comparison site MoneySupermarket.
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“For example, an airmiles credit card is useful if you’re a regular flyer, but if you’re not planning any trips, a credit card that gives you cashback for everyday spending could be a better option.”
With the average Brit spending £765 a month on their credit card, according to stats from analytics firm FICO, you could be earning over £100 a year in cashback.
If you prefer rewards, you could earn over 9,000 Amex points - which could get you a European flight, although you’d still have to pay taxes and fees.
These rewards are only freebies, though, if you avoid paying any interest on the credit card, so make sure to pay off your bill in full every month to avoid paying anything extra.
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Interest rates on credit cards have risen sharply in the past 12 months. On average, you paid 31.2% APR in June 2023, according to Moneyfacts. That had risen to 35.3% APR this month.
The interest rates on rewards credit cards tend to be a lot higher – it’s currently 43%APR on average stats from comparison site Finder shows.
To get the most from these cards, you need to pay your bill off in full each month to avoid interest - and you grab those rewards.
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The best cashback credit cards
The most straightforward rewards credit card is a cashback card.
These cards deduct a percentage of what you’ve spent from your balance – effectively giving you money back on your spending.
“Cashback cards are one of the most popular types of credit card,” said Andy Hancock, from comparison site Compare the Market.
“They can provide great rewards, potentially earning you money back on your everyday spending or big-ticket purchases, such as a new sofa or a holiday.”
First up is Santander’s Edge Credit Card. It pays 2% cashback up to a maximum £15 a month for the first year then it drops to 1% a month. This card has a £3 monthly fee and 29.8%APR.
With this card the average credit card user would make £180 in cashback but that drops down to £144 once you deduct the monthly fee.
And another catch is that you must have a Santander Edge current account.
An alternative is the American Express Cashback Everyday card. This pays 5% cashback for the first three months up to a maximum £100.
After that you’ll earn 0.5% cashback on the first £10,000 you spend a year and 1% cashback on spending over £10,000. The card charges 31%APR.
So, the average credit card user spending £765 a month would make £135 in the first year. However, to earn any cashback at all on this card you must spend at least £3,000 a year.
The best rewards cards
If you’d rather earn points, then one of the best is the Amex Rewards card. Spend £2,000 in the first three months and you’ll get 10,000 bonus Amex points, plus you get one Amex point for every £1 you spend. The interest rate is 31%APR.
So, in just the first three months you could amass 12,000 points which is enough for £60 in vouchers.
Another points option is the John Lewis Credit Card. You’ll earn five points for every £4 you spend in John Lewis or Waitrose and one point per £4 spend elsewhere.
In the first 60 days you get double points and there is a 0% interest offer on new purchases for the first three months. After that, pay your bill off in full, otherwise you’ll be charged a hefty 39.9%APR.
For every 500 points you collect you get a £5 voucher to spend in John Lewis or Waitrose.
The best rewards for travellers
If you’d rather build up savings for your next holiday abroad, then a travel rewards card may be more appealing.
The Amex Rewards card we’ve already mentioned is great for travellers too.
That’s because Amex points can be transferred into several different airmiles schemes including British Airways, Virgin Atlantic, Emirates and Etihad so you aren’t tied to flying with one airline to use your points.
Alternatively, the Barclaycard Avios card is a good choice for anyone who regular flies with British Airways or other members of the Oneworld group such as American Airlines or Quantas.
You can earn 5,000 Avios points in the first three months if you spend at least £1,000. After that you get one point per £1 spent plus a free cabin upgrade if you spend more than £20,000 a year on your credit card. The interest rate is 29.9% APR.
If you travel more with Virgin Atlantic, consider its Reward card. You earn 0.75 points per £1 spent plus 3,000 bonus points on your first purchase. You’ll also get a free Flying Club reward if you spend more than £20,000 a year. The card charges 26.9%APR.
What’s the catch?
The interest rate. Traditionally, the rate has always been higher on these type of cards – the credit card providers hope they’ll claw back the value of the freebies by charging high interest.
“These cards tend to have higher interest rates and can have monthly fees,” says Hancock. “Unless you can pay off your credit card in full every month, it might not be the right borrowing option.”
Also, be aware which company provides the transactions on your card. While Mastercard and Visa are widely accepted some retailers won’t accept American Express .
“Be careful when travelling abroad,” says Gammell. “Check if you’ll be charged. Many credit cards charge fees for foreign transactions, so it can be a good idea to look for a card that won’t charge you for using it abroad if that’s how you plan to use it.”
Finally, don’t assume your application for a rewards or cashback credit card will be accepted. These deals are typically reserved for people with excellent credit ratings and, in some cases, reasonably high earnings.
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If you aren’t sure, you’ll be accepted use a comparison website with an eligibility checker first. These will ask you a few questions and perform a soft search of your credit report then show you the credit card deals you are likely to be accepted for. You can then apply with confidence.
How to boost your credit score
Your credit score gives an overall picture of how responsible you are with money.
The score show lenders whether you’ve been a reliable borrower in the past.
If you’ve never used credit before you may have a low credit score and struggle to get accepted for credit.
To boost your credit score, show lenders you are a stable, reliable individual by registering to vote.
Being on the electoral roll confirms your address to lenders so can significantly boost your credit score – it can add 50 points, according to Experian.
Get a copy of your credit report – you can get one for free from Experian, Equifax or TransUnion – and check it for mistakes.
Make sure your personal details are correct and that any missed payments or black marks on your file are correct.
If there are mistakes, ask the financial firm involved to correct them or ask for a note to be put on your file explaining them.
Finally, consider getting a credit builder credit card. These are designed for people with poor or limited credit histories.
This means you are more likely to be accepted but the interest rate may be higher and the credit limit lower than on mainstream cards. Some of these cards come with rewards too.
Tesco Bank’s Foundation credit card is designed for people with a poor credit score and allows you to earn Clubcard points on your spending.
The interest rate is 29.9%APR.Alternatively, Asda Money’s Select credit card helps you build your credit score and pays 5% cashback on Asda spending for the first three months then 1% cashback on Asda spending plus 0.3% cashback on purchase made elsewhere. The interest rate is 34.9%APR.