Credit cards Updated:
More than ever before, consumers are scrutinising financial products before signing up, but the word cashback is still sure to garner attention.
Barclays has become the latest lender to enter this emerging market, having launched the competitively priced Cashback Mastercard, which gives consumers the chance to earn one per cent cash back on the first £20,000 they spend each year.
It sits just below the best card in the category; the American Express Platinum Cashback Card offers five per cent cash back for three months, with up to 1.35 per cent thereafter.
Egg's Money World Mastercard is also worth a mention and also offers a cashback rate of one per cent.
The sector is in its relative infancy but the emergence of such offers suggests growth is imminent in the cashback arena. The appeal of receiving payment from providers for using their products is obvious, particularly for those in the market for a new credit card.
However, as Louise Holmes, spokesperson at Moneyfacts.co.uk, warns, it is imperative that borrowers make themselves familiar with the terms and conditions of such products.
"Be confident that you can pay off the balance in full each month and not just the minimum repayment. If monthly payments are missed regularly, any benefits such as cash back or introductory deals which rely on good account conduct will be removed by the provider.
"Avoid withdrawing cash on your credit card, as the interest charged can be notoriously high compared to making purchases. If you do have short term cash needs, then it may be worth asking your bank the rate it charges to dip into your overdraft, as this is likely to work out cheaper.
"If managed efficiently, customers can enjoy a host of benefits from their card including cash back, vouchers, air miles and interest rebates."
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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