Is the new Lloyds cashback credit card the best on the market?

Lloyds Bank launched the Lloyds Cashback credit card yesterday, a new free Mastercard.

Surprisingly (given that Lloyds Bank is not known for ‘best buy’ products) the Lloyds cashback credit card seems to be the best product of its kind out there.

It is worth a look if you can’t find any ‘miles and points’ Visa or Mastercard products to excite you. The official card website is here.

The only reason I am mentioning this card (we don’t get paid for promoting it) is that the current options for a rewarding Visa or Mastercard to use alongside an Amex are slim.

If you want travel rewards, your only options are, assuming you don’t qualify for HSBC Premier:

• the free IHG Rewards Mastercard, which gives 1 IHG Rewards point per £1 spent. I value IHG Rewards points at 0.4p+ so your return is 0.4% with possible upside. The points also count towards IHG Rewards status. Our IHG Rewards Mastercard review is here.

• the free Virgin Atlantic Reward Mastercard, which gives a whopping 0.75 Virgin Points per £1 spent. I value Virgin Points at 1p but with the big caveat that you need to redeem for a long-haul premium cabin flight to achieve this. Anyone with only a modest points balance will end up nearer 0.5p per Virgin Point via a Virgin Red redemption. Our Virgin Atlantic Reward Mastercard review is here.

• the £160 Virgin Atlantic Reward+ Mastercard with a sign-up bonus of 15,000 Virgin Points, which gives a whopping 1.5 Virgin Points per £1 spent. This is an excellent product for the first year since the sign-up bonus offsets the annual fee. Our Virgin Atlantic Reward+ Mastercard review is here.

Of the non-travel rewards cards, all of the free options give you 0.25p per £1 spent or less.

This can either be in the form of cashback (Barclaycard Rewards) or store vouchers (John Lewis Partnership Card). Your return can get as low as 0.1p per £1 spent (Sainsbury’s Nectar Credit Card).

The Lloyds Bank Cashback credit card smashes the 0.25% cap for big spenders

This is what the new Lloyds cashback credit card, launched yesterday, offers:

• no annual fee
• representative APR 19.9% variable
• £20 sign-up bonus if you spend £1,000 in your first three months
• 0.25% cashback on the first £4,000 of annual spend
• 0.5% cashback on all spend above £4,000 per year
• cashback paid in a lump sum in January, added to your statement balance

This is quite a smart model, I think. By offering base cashback of 0.25%, the Lloyds Bank Cashback credit card instantly becomes equally as good as the ‘best of the rest’.

The more you spend above £4,000 per year, however, the more it pulls away from the pack.

How do the numbers work?

This is how the maths looks on the Lloyds Bank Cashback credit card:

• Spend £4,000 per year, get an average of 0.25% cashback
• Spend £8,000 per year, get an average of 0.37% cashback
• Spend £12,000 per year, get an average of 0.42% cashback
• Spend £16,000 per year, get an average of 0.44% cashback
• Spend £20,000 per year, get an average of 0.45% cashback

Whilst the Santander All In One Mastercard pays 0.5% cashback, the £3 monthly fee means that it NEVER becomes better value than the new Lloyds card.

For example, even if you spent £100,000 per year on the card, Santander would only get you £464 net of card fees whilst Lloyds Bank Cashback would get you £490.

There is one snag

The money you make on the Lloyds cashback credit card is based on your calendar year spending and, of course, it is now almost August.

This means that you will earn a lower average cashback rate in 2021. With only five months of the year to go, you won’t be spending much above the £4,000 level which triggers the higher 0.5% band.

In my example above for someone who spends £1,000 per month, they would – in 2022 – get an average cashback rate of 0.42%.

However, if you applied now and spent £1,000 per month you would only spend £5,000 in 2021. This means total cashback of £15 which is just 0.30%. You would have the £20 sign-up bonus though.

Got a small business?

If you are looking for a cashback card for your small business, ignore everything I have written above.

You are better off with the Barclaycard Select Cashback credit card. This is free and pays a flat 1% cashback.

Our review of the Barclaycard Select Cashback credit card is here and you can apply here.

Conclusion

In the past few days we have looked at aggressively good credit cards from Barclays and Lloyds, two organisations which you would normally link with second-rate ‘good enough’ products.

The Lloyds cashback credit card is a positive sign for the market and will hopefully spur other issuers in the reward space to up their game.

You can learn more about the Lloyds Bank Cashback credit card on its website here.

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Want to earn more points from credit cards? – April 2025 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

SPECIAL OFFER: Until 27th May 2025, the sign-up bonus on the ‘free for a year’ American Express Preferred Rewards Gold card is increased from 20,000 Membership Rewards points to 30,000 points. Points convert 1:1 into Avios (30,000 Avios!) and many other programmes. Some people may see even higher personalised offers. Click here to apply.

SPECIAL OFFER: Until 27th May 2025, the sign-up bonus on American Express Platinum is increased from 50,000 Membership Rewards points to a huge 80,000 points. Points convert 1:1 into Avios (80,000 Avios!) and many other programmes. Some people may see even higher personalised offers. Click here to apply.

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers: