Are the best UK cashback credit cards a good alternative to miles and points cards?
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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 all reward cards continue to be squeezed it is worth keeping an eye on the best alternatives.
After all – and this is a topic I am looking at in more detail tomorrow – you could use the cashback to pay for travel directly or even buy points in your preferred programme.
What about the 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.
There are two American Express cashback cards. 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 representative APR is 36.7% variable, including the annual fee. The representative APR on purchases is 31.0% 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 representative APR is 31.0% variable.
To save you getting your calculator out to assess the impact of the £25 fee on your returns, the break-even point for getting the £25 Platinum Cashback card is £10,000 of spending per year. If you would spend over £10,000 on the card, pay £25 for the Platinum Cashback version.
For everyone except the highest spenders, you are better off with the free Platinum Cashback Everyday card.
What are the best free Mastercard and Visa cashback products?
Cashback Visa and Mastercard products without annual fees are not hugely generous following the cap on interchange fees.
0.2% is key figure to bear in mind. This is generally what you will now get from most cashback (or pseudo cashback) Visa and Mastercards:
Amazon halved the earning rate of its Platinum Mastercard in 2019 and now gives 0.5p of Amazon vouchers per £2 spent outside Amazon (ie 0.25%).
John Lewis cut the rate on its Partnership Card from 0.5% to 0.25% cashback on non-John Lewis / Waitrose spend in July 2020 (this card pays in John Lewis / Waitrose shopping vouchers).
The Marks & Spencer credit cards offer 1 M&S point for every £5 you spend outside M&S, with 500 points getting you a £5 M&S shopping voucher for a return of 0.2%.
An impressive new entrant is the Barclays Rewards card. Not only does this give you 0.25% cashback – in real cash, not vouchers – but it also have no foreign exchange fees.
Some cards are even worse. The Sainsbury’s Bank credit cards give 1 Nectar point, worth 0.5p, for every £5 you spend – a return of just 0.1%.
Do these cards beat the best free travel cards?
No, would be my answer, as long as you are smart in using your miles and points.
American Express
The free British Airways American Express, American Express Rewards Credit Card or Amex Gold (free in Year 1) should all beat Platinum Cashback Everyday.
If you use your miles wisely, you would be better off with one of the three cards.
All of these cards earn 1 Avios or the equivalent of 1 Avios per £1 spent, and you should be able to get 1p+ per Avios when you redeem. My spreadsheet of the last 7.7 million Avios I redeemed shows an average value of 1.18p per point, and I am conservative in my valuations.
Arguably …. and this is an article for another day …. the free British Airways American Express card is now the best free cashback credit card in Britain for most people. You get 1 Avios per £1 which you can convert into 1.6 Nectar points, which are worth 0.8p when spent in Sainsbury’s, Argos or eBay. You need to spend £13,000+ per year before the Platinum Cashback Everyday card pays you more.
Visa and Mastercard
The best free travel rewards Mastercard or Visa credit cards are still substantially better value than the main cashback cards. You’ve got:
Virgin Atlantic Reward Mastercard
This free card offers 0.75 Virgin Flying Club miles per £1 spent. If you can get 1p per mile by redeeming smartly, you are getting a 0.75% return on your spending. Even if you get a little less than this, you are still head and shoulders above most of the cashback cards above.
Our full Virgin Atlantic Reward Mastercard review is here and you can apply here.
IHG Rewards Mastercard
This offers 1 IHG Rewards point per £1 spent. These are generally worth around 0.4p when used for Holiday Inn / Crowne Plaza / InterContinental etc hotel rooms, and at peak dates you can do a lot better. The card also gets you Gold status in IHG Rewards for as long as you hold it.
Our full IHG Rewards Mastercard review is here and you can apply here.
HSBC Premier Mastercard
This offers points which convert into 0.5 Avios, 0.5 Etihad Guest miles, 0.5 Asia Miles or 0.5 Singapore Airlines Krisflyer miles for every £1 you spent. If you can get 1p per mile – and some of these schemes offer better value than Avios – then you are getting 0.5% back on your spending and potentially more.
Our full HSBC Premier Mastercard review is here. Note that you need to be a HSBC Premier customer to get this card.
I have only looked at free cards here because it is easier to compare the rewards.
That said, as there is no sign-up bonus on the free Virgin Atlantic credit card, it makes more sense, in Year 1, to pay £160 for the Virgin Atlantic Reward+ credit card which comes with 15,000 Flying Club miles as a sign-up bonus. This card earns a huge 1.5 miles per £1 spent and you can downgrade to the free card from Year 2.
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 or the free airport lounges passes with Amex Gold. 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.
Sign-up bonus and earn rate:
- Get 5% cashback on your spending for 90 days (£125 cap)
-
Spend £0 to £10,000 per year and receive 0.75% cashback going forward
-
Spend over £10,000 per year and receive 1.25% cashback going forward
Other information:
- Cashback paid in a lump sum after 12 months
- Annual fee: £25
Representative 36.7% APR variable based on an assumed £1,200 credit limit and £25 annual fee. Interest rate on purchases 31.0% APR variable.
You will receive 5% cashback on purchases on the Amex Cashback Credit Card within 90 days of signing up. This is capped at £125.
To qualify for the bonus, you must NOT, currently or in the previous 24 months, have held any other personal American Express card.
You are OK if you had a supplementary card on someone else’s American Express account.
You are OK if, currently or in the previous 24 months, you have held a Business American Express card.
For clarity, you can still apply for the Amex Cashback Credit Card even if you do not qualify for the bonus. You will receive the standard rate of cashback on your spending.
The Amex Cashback Credit Card is the most generous cashback credit card in the UK.
After the first three months, during which the special bonus rate applies:
-
Spend £0 to £10,000 and receive 0.75% cashback on purchases
-
Spend over £10,000 and receive 1.25% cashback on purchases
Cashback is paid in a lump sum at the end of each 12 month period. If you close the card mid-year you will lose any accumulated cashback.
As our review shows, this card is better value if you will spend over £10,000 per year. If you will spend under £10,000 per year, you should apply for the free Amex Cashback Everyday Credit Card instead. The cashback rate is lower but this is offset by the lack of any annual fee.
You need a minimum personal income of £20,000 to apply for the card.
Amex Cashback Everyday Credit Card
Sign-up bonus and earn rate:
- Get 5% cashback on your spending for five months (£125 cap)
-
Spend £0 to £10,000 per year and receive 0.5% cashback going forward
-
Spend over £10,000 per year and receive 1% cashback going forward
Other information:
- Cashback paid in a lump sum after 12 months
- Minimum spend of £3,000 per year required to receive cashback
- Annual fee: Free
Representative 31.0% APR variable
You will receive 5% cashback on purchases on the Amex Cashback Everyday Credit Card within five months of signing up. This is capped at £125.
To qualify for the bonus, you must NOT, currently or in the previous 24 months, have held any other personal American Express card.
You are OK if you had a supplementary card on someone else’s American Express account.
You are OK if, currently or in the previous 24 months, you have held a Business American Express card.
For clarity, you can still apply for the Amex Cashback Everyday Credit Card even if you do not qualify for the bonus. You will receive the standard rate of cashback on your spending.
The Amex Cashback Everyday Credit Card is the most generous free cashback credit card in the UK.
After the first three months, during which the special bonus rate applies:
-
Spend £0 to £10,000 and receive 0.5% cashback on purchases
-
Spend over £10,000 and receive 1% cashback on purchases
You must spend at least £3,000 per year to receive cashback.
Cashback is paid in a lump sum at the end of each 12 month period. If you close the card mid-year you will lose any accumulated cashback.
As our review shows, this card is better value if you will spend less than £10,000 per year. If you will spend over £10,000 per year, you should apply for the £25 Amex Cashback Credit Card instead. The cashback rate is higher and you are better off even after paying the annual fee.
You need a minimum personal income of £20,000 to apply for the card.
Sign-up bonus and earn rate:
- Earn 3,000 Virgin Points after your first transaction
- Earn 0.75 Virgin Points per £1 spent
- Earn 1.5 points per £1 spent with Virgin Atlantic
Other information:
- Get a ‘2 for 1’ voucher, valid on cash or points tickets, when you spend £20,000 in a year
- Alternatively, claim an upgrade voucher or Clubhouse lounge passes
- Annual fee: Free
Representative 26.9% APR variable
You receive a bonus of 3,000 Virgin Points after your first purchase, however small.
You may want to consider applying for the Virgin Atlantic Reward+ Mastercard instead for its higher bonus. This comes with a £160 annual fee but has a sign-up bonus of 18,000 Virgin Points. You also receive a higher earning rate of 1.5 miles per £1 spent.
You cannot apply if you have had the free Virgin Atlantic Reward credit card in the previous six months. You are free to apply if you have any other Virgin Money credit card or the paid-for Virgin Atlantic Reward+ credit card.
When you spend £20,000 per year on the Virgin Atlantic Reward Mastercard, you can choose a benefit. This is what you can pick from:
A 2-4-1 voucher, valid for two years, for a Virgin Atlantic cash flight or Virgin Flying Club redemption, in Upper Class, Premium or Economy
A return upgrade – on either a cash or points ticket – from Premium to Upper Class, or from Economy Delight/Classic to Premium. You can either upgrade 1 x return flight if travelling alone or 2 x one-way legs of two return flights if travelling with someone else.
For elite members, Virgin Clubhouse lounge passes (require a same-day Virgin Atlantic or Delta Air Lines flight) – one pass if you are Silver, two passes if you are Gold
Here’s the small print:
If you are a Red (no status) member, you need to pay 50% of the points for your 2nd ticket if you redeem your 2-4-1 voucher in Upper Class. This means that, for Upper Class redemptions for Red members, it is effectively a ‘2 for 1.5’ voucher. For Economy or Premium redemptions, it is a genuine ‘2 for 1’.
Taxes and charges need to be paid on the ‘free’ ticket as part of your 2-4-1 booking
Vouchers are valid for two years and you must fly the outbound leg of your trip before the expiry date
Sign-up bonus and earn rate:
- Get 18,000 Virgin Points after your first transaction
- Earn 1.5 Virgin Points per £1 spent
- Earn 3 points per £1 spent with Virgin Atlantic
Other information:
- Get a ‘2 for 1’ voucher, valid on cash or points tickets, when you spend £10,000 in a year
- Alternatively, claim an upgrade voucher or Clubhouse lounge passes
- Annual fee: £160
Representative 69.7% APR variable based on an assumed £1,200 credit limit and £160 annual fee. Interest rate on purchases 26.9% APR variable.
You receive a bonus of 18,000 Virgin Points after your first purchase, however small.
There are no restrictions on earning the bonus if you are accepted.
You cannot apply if you have had a Virgin Atlantic Reward+ credit card in the previous six months. You are free to apply if you have any other Virgin Money credit card or the free Virgin Atlantic Reward credit card.
When you spend £10,000 per year on the Virgin Atlantic Reward+ Mastercard, you can choose a benefit. This is what you can pick from:
A 2-4-1 voucher, valid for two years, for a Virgin Atlantic cash flight or Virgin Flying Club redemption, in Upper Class, Premium or Economy
A return upgrade – on either a cash or points ticket – from Premium to Upper Class, or from Economy Delight/Classic to Premium. You can either upgrade 1 x return flight if travelling alone or 2 x one-way legs of two return flights if travelling with someone else.
For elite members, Virgin Clubhouse lounge passes (require a same-day Virgin Atlantic or Delta Air Lines flight) – one pass if you are Silver, two passes if you are Gold
Here’s the small print:
If you are a Red (no status) member, you need to pay 50% of the points for your 2nd ticket if you redeem your 2-4-1 voucher in Upper Class. This means that, for Upper Class redemptions for Red members, it is effectively a ‘2 for 1.5’ voucher. For Economy or Premium redemptions, it is a genuine ‘2 for 1’.
Taxes and charges need to be paid on the ‘free’ ticket as part of your 2-4-1 booking
Vouchers are valid for two years and you must fly the outbound leg of your trip before the expiry date
Sign-up bonus and earn rate:
- Get 10,000 IHG Rewards points when you spend £200 within 90 days
- Earn 1 IHG Rewards point per £1 spent
- Points convert at 5:1 into Avios or other airline miles
Other information:
- Receive Gold Elite status in IHG Rewards
- Points from spend count towards elite status
- Annual fee: Free
Representative 22.9% APR variable
You receive 10,000 IHG Rewards points as a sign-up bonus when you spend £200 within 90 days.
There are no restrictions on receiving the bonus if you have previously held this card or the (no longer available) IHG Rewards Premium Mastercard.
All IHG Rewards cardholders receive Gold Elite status in IHG Rewards for as long as they hold the card.
This is the only UK travel card where the points you earn from spending count towards elite status. The 10,000 points you receive as a sign-up bonus do not count towards elite status, however.
Sign-up bonus and earn rate:
- No sign-up bonus
- Earns 1 HSBC point per £1 spent
- Points convert at 2:1 into Avios or nine other programmes
Other information:
- Only available to HSBC Premier account holders
- Annual fee: Free
Representative 23.9% APR variable
There is no sign-up bonus on the HSBC Premier Mastercard.
There is a bonus on the HSBC Premier World Elite Mastercard. This is worth 40,000 HSBC points (worth 20,000 Avios or other airline or hotel points) for spending £2,000 within three months and a further 40,000 HSBC points (=20,000 points) for spending £12,000 within twelve months. The annual fee is £195 and you need to pay the fee for the second year in order to receive the second half of the bonus.
The points earned with the HSBC Premier Mastercard can be transferred to 10 airline and hotel loyalty schemes – Asia Miles, British Airways Executive Club / Avios, Emirates Skywards, Etihad Guest, Finnair Plus, Flying Blue (Air France KLM), Qantas Frequent Flyer, Singapore Airlines KrisFlyer, TAP Miles&Go and Wyndham Rewards.
They can also be redeemed for other items including retailer gift cards.
Cardholders can access any airport lounge in the LoungeKey network for a fee of £20 per visit.
(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’ link in the menu bar at the top of the page.)
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