Are the best cashback credit cards a good alternative to miles and points cards?

Cashback credit cards are not a core focus of Head for Points due to, erm, their lack of points.

That isn’t going to change, but as the benefit packages on reward cards continue to be squeezed it is worth keeping an eye on the best alternatives.  After all, you could use the cashback to pay for travel directly or even buy points in your preferred programme.

American Express cashback products

The best cashback cards come from American Express because these have not been impacted by the 0.3% cap on interchange fees.  With retailers paying more to accept the cards, Amex can pass back more to you.

You can find details of the Platinum Cashback card here and the Platinum Cashback Everyday card here.

The Platinum Cashback card pays you cashback at the following rate:

  • 5% cashback on all your spending in the first three months, up to £2,500 of purchases
  • 1% back if you spend under £10,000 from month 4 to month 12 (and annually thereafter)
  • 1.25% back on your spend over £10,000 from month 4 to month 12 (and annually thereafter)

It comes with a £25 annual fee.  The Platinum Cashback credit card has a representative APR of 28.2% variable, including the £25 fee, based on a notional £1,200 credit limit.  The interest rate on purchases is 22.9% variable.

Meanwhile …..

The Platinum Cashback Everyday card (free) has a tiered reward system:

  • 5% cashback on all your spending in the first three months, up to £2,000 of purchases

After the first three months, you will earn:

  • 0.5% on the first £5,000 of spend (but you get nothing if you spend under £3,000)
  • 1% back on your spend over £5,000

Cashback is paid in a lump sum at the end of each card year.  The card has a representative APR of 22.9% variable.

To save you getting your calculator out, the break-even point for getting the £25 card is £10,000 of spending per year.  For everyone except the highest spenders, you are better off with the free Platinum Cashback Everyday card.

American Express Platinum Cashback credit cards review

MasterCard and Visa cashback products

Cashback Visa and MasterCard products are not hugely generous following the recent cap on interchange fees.  However, they are arguably no worse – and in some cases better – than the two main Avios alternatives which are:

Lloyds Avios Rewards American Express & MasterCard (£24 fee, representative APR 23.7% variable including fee) – 0.25 Avios per £1 on the MasterCard, a poor deal but MasterCard spending counts towards the upgrade voucher you receive for spending £7,000

Tesco Clubcard MasterCard (free, representative APR 18.9% variable) – 0.3 Avios per £1, based on 1 Clubcard point per £8 spent.  However Tesco rounds down each transaction to the nearest £8 which means your actual earning rate is lower.

There are a number of cashback Visa and MasterCard products which offer the equivalent of 0.5% back, either in cash or ‘as good as cash’ vouchers.  My favourite options include:

ASDA Cashback Card (representative APR 19.9% variable) – free, 0.5% cashback, 1% cashback in ASDA, cashback paid in vouchers which can only be redeemed in ASDA

Amazon Platinum MasterCard (representative APR 21.9% variable) – free, 0.5% cashback, 0.75% cashback at Amazon, cashback paid in Amazon credit

I don’t think there are any cashback cards which offer more than 0.5% in cash or vouchers on your general spending.  Some of these cards also offer 0% deals on purchases or balance transfers.

Conclusion

I am not suggesting that you should drop your existing reward credit cards and switch to cashback cards instead.  It depends what value you place on your miles and points.

Importantly, these calculations don’t take into account the other benefits offered by travel loyalty cards, such as the 2-4-1 voucher on the British Airways American Express.  It is always good to be aware of the alternatives though.   If you have tried and failed to get your friends to switch from ‘no rewards’ cards to a ‘miles and points’ card, at least do them a favour and tell them to get a good cashback card instead.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history. By recommending credit cards on this site, I am – technically – acting as a credit broker.  Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

Review of the Rendezvous Executive Lounge at Ronaldsway Airport - Isle Of Man
New IHG PointBreaks list of 129 x 5,000 point hotels, book on Monday
About Head for Points

We help business and leisure travellers maximise their Avios, frequent flyer miles and hotel loyalty points. Visit every day for three new articles or sign up for our FREE emails via this page or the box to your right.

Comments

  1. A colleague of mine would like the JLP card but applications have been closed for the past few months. Any idea when they’ll reopen?

    • I too have noted this, as have been planning to switch to this for non Amex spend. Very strange and no indications when applications will be open.

    • IT issues with HSBC who provide the card services on behalf of JL – probably another 3 months minimum before this is open to new applicants again.

  2. Not Avios but how about the Virgin Visa? I believe you can now also use your Virgin points for kaligo bookings?

  3. Michael,

    I read somewhere that nat west are pulling the priority pass benefit for their black card from April this year. I may be wrong, but friends have it and find it very useful. Are there two different levels of black card then? Just to check it out in case priority might be a reason for getting it.

  4. It’s only a short term offer, but TSB have a MasterCard with 1% (up to £5/mo), if you have a current account with them.

    I recently switched my Avios duo card over to it – which did require a trip to a branch.

  5. Raffles, your take on the Asda card isn’t accurate. The 0.5% is paid out as credit on each and every statement, not in Asda vouchers.

  6. TGLoyalty says:

    To Spend in Costco?

  7. Yes, saw that but you need to spend £600 to outweigh the £3 each month.

  8. I have done articles on this card in the past.

  9. I have looked at this but never pulled the trigger. Not sure why ?

    http://www.costco.co.uk/costco_trueearnings_card

    I put around £150k a year on Amex but am just considering the churn for points benefits. Have BAPP but the metal on my routes is awful and I have decided I won’t use it. Looking at SPG and likely to do Amex Plat for business with wife and churn.

    Really need a good non Amex card which beats Nationwide CC with 0.5% back.

  10. rams1981 says:

    OT

    @genghis did a bit more checking and the return flight from Johannesburg has two options. The earlier one is a A380 and supposedly more comfortable. The later one has more availability (last two days have had Monday and Tuesday flights with no limits on business seats you can book with miles for example i.e. Doesn’t say only 2 seats available) and also has some first class seats available.

    So I’m thinking to return in business on the earlier flight.

  11. Another vote here for TSB debit card for 5% until September and Nationwide Select credit for 0.5% ongoing. These together are tiding me over very nicely until my Amex gold churn. Not sure why Rob didn’t include either in the article to be honest, they’re the simplest and reasonably lucrative in the case of TSB at least.

    • The TSB credit card for £500 of spending a month is 1%. Also if only churning gold you might as well pickup another different amex to churn as well if you only have gold.

  12. Just to add to the list of 0.5% paying (in vouchers) card, since November there has been a Thomson credit card (Mastercard), it pays 1 Thomson Reward Point per £1 with Thomson/First Choice, and 1 per £2 elsewhere.
    100 Thomson Reward Points are worth £1 with Thomson/First Choice.

    Therefore 0.5% back, or 1% if you book with them.
    The card also exempts you from credit card fees in a Thomson travel shop or on their websites for booking a holiday, and is fee free for travel money in a Thomson shop or at thomsontravelmoney.co.uk.

    Certainly not a recommendation on my part, as the gift card argument holds true: if you are getting something that is value as money (rather than a potential leverage product like miles) then I would much rather have it is money (that can’t be spent anywhere) than as credit/gift card.

    Might be of interest note to some people, especially if they are Thomson users,etc. Just mentioned for completeness.

    Card issued by NewDay

    • Perils of small screen writing – that should be:
      “if you are getting something that is valueD as money (rather than a potential leverage product like miles) then I would much rather have it is money (that CAN be spent anywhere) than as credit/gift card.”

  13. It’s not being removed from the black current account but from the credit card – they are two separate products I think.

    • That would explain it then, Tnx for clarifying. Thought the card might connected to the account.

  14. Disillusioned says:

    After collecting a shed load of points over the years and currently having Amex BA cards and a couple 2-4-1 vouchers time came to book, or try to book using BA.

    After the excellent article on using the 241 vouchers here and many hours trying to negotiate the BA website and offices.

    what a royal PiTA.

    Looking for flights to Oz, in all cases the flights were more of less the same price with Singapore , quantas and Qatar than it was after using the 241 voucher.

    Especially after you factor in the hassle of BA avois faf and the £150/yr to “own” an Amex BA card, for most people it’s simply not worth the time & effort!

    If you have corporate spending to collect avios, great but I think I’m switching to a cash back card…..

    • You should NEVER redeem Avios for economy long-haul flights. They do, however, make perfect sense for short-haul (both classes) and long-haul premium.

      Secondly (and this is a personal view) you should NEVER redeem for Australia. You won’t get seats anyway, because (due to the Singapore stopover) you have to compete for seats with people flying to Singapore. Direct UK flights to Oz have dropped 75% in the last 5 years so BA released very few seats. More importantly, the taxes – because it is 2 flights each way – are very high.

      Use your points for something more useful. We are using 2 x 241 to fly Club down to Hong Kong at Easter and back First Class from Beijing.

      • “Use your points for something more useful. We are using 2 x 241 to fly Club down to Hong Kong at Easter and back First Class from Beijing.”

        This is where I am ultimately at. The missus and daughter can put up with the BA 241 777 8 abreast in “business” class on LHR-BKk as it is the equivalent of 165k points and £1050 cash. Even then, it is a struggle to make the numbers stack up if there is a decent ME3 sale on.

        On the other hand, I am not flying their tin 8 abreast but I do like the new LHR-KUL first class http://i.dailymail.co.uk/i/pix/2015/10/19/11/2D8DDDF000000578-3279022-image-a-18_1445249825897.jpg which is perhaps an aspirational reward.

        Likewise, first from anywhere decent or business on any good metal but not 8 abreast.

      • Disillusioned says:

        Makes sense thanks.
        Maybe just try to book to Singapore.

        The BA website is not easy to navigate. Unless you are flying from London there is often not even an option to fly from Manchester using avios.

        Thinking of muscat now…..

        • Sadly BA IT has always been poor, esp for connections. Once booked you’ll also find a nice list of flights to London, rather than to where you’re actually flying to!

      • maybe except one-way economy long-haul at last minute

  15. The related RBS Rewards itself is well worthwhile – £3/mo for 3% off lots of direct debits – has paid for itself many times over, plus better return than trying to pay council tax with credit card!

  16. For moderate spenders, the Lloyd’s Choice Rewards (http://www.lloydsbank.com/credit-cards/choice-rewards.asp) card offers points redeemable for an equivalent of 1.5% back in Amazon vouchers, plus double points in the first 6 months (so 3% then) for a £24 fee. You can also redeem the points for avios (1 point per £) but I think Amazon vouchers are generally worth more. Not sure why nobody ever seems to recommend it!

    • I prefer the Lloyds Avios cards which, for the same annual fee, do not charge the usual 2.99% FX charge on foreign currency spending.

    • It’s in our credit cards directory because of the Avios angle but Lloyds Avios Rewards is better so we focus on that.

  17. How does having a cash back card affect your 6 month “holiday” if you are reapplying for the Amex Gold or Platinum card and aiming for sign up bonus points?

  18. If they pay out of course – they didn’t for me! Hopefully they won’t switch affiliate network again. Thankfully Amex sorted it out, although most other companies probably wouldn’t!