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.
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.
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.
Want to earn more points from credit cards? – September 2021 update
If you are looking to apply for a new credit or charge card, here are our September 2021 recommendations based on the current sign-up bonus.
The following offers will end soon:
- 2,000 Virgin Points on Virgin Atlantic Reward Mastercard (ends 15th October)
- 30,000 Virgin Points on Virgin Atlantic Reward+ Mastercard (ends 15th October)
- 10,000 Avios on British Airways American Express (ends 2nd November)
- 40,000 Avios on British Airways American Express Premium Plus (ends 2nd November)
- 60,000 points on The Platinum Card from American Express (ends 2nd November)
- 30,000 points on American Express Preferred Rewards Gold (ends 9th November)
Here are the top current deals:
British Airways American Express
10,000 Avios for signing up, no annual fee and an Economy 241 voucher for spending ….. Read our full review
British Airways American Express Premium Plus
40,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 30,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward Mastercard
The UK’s most generous free Visa or Mastercard at 0.75 points / £1 Read our full review
Virgin Atlantic Reward+ Mastercard
30,000 points bonus and the most generous non-Amex for day to day spending Read our full review
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.
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
British Airways Accelerating Business American Express
60,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review
Capital On Tap Business Rewards Visa
The most generous Avios Visa or Mastercard for a limited company Read our full review
For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending: