Current Account Cashback vs Credit Card Cashback

Shoxt3r

Hi all,

So I've been with my bank (Natwest) for a fair old while and I've been looking at their Rewards current account offering. At the moment I've just got their standard account. Looking at the cashback on offer per month it seems likely that I will get a return of about £6-7 per month from them, more so if I get the Rewards Credit Card. The account, less the £2 monthly fee basically gets me about £4-5 per month.

Yes it's not a huge amount and that could fluctuate but still be enough each month to at least pay the fee and get me some extra money a month. Plus, if I do get the Credit Card with them as well, then this could earn more.

I've looked at Barclaycard Rewards Credit Card (I've had a CC before) but they're offering seems to be pretty poor. Unless you're spending very large amounts on it then it really doesn't seem to add up to much - at least in my case. I've worked out I will probably only get about £5-10 every quarter.

What's everyone's opinions of these "cashback" current accounts and credit cards - are they really worth it or just another way for banks to snoop on what you're buying for marketing purposes and pay everyone peanuts for the privilege?

Cheers,

Shoxt3r

Neil_Jones

Santander 123 pays cashback like the Natwest account but some attract 1%, some 2%, some 3%. It comes with a lower monthly fee (£1 for Lite but the account pays no interest. £5 for regular 123 which is 1.5% Gross but that will cost £60 a year which effectively relages it to 1.2%).

Cashback on credit cards tends to be more towards the 'knock a portion off your outstanding balance' as opposed to bank account cashback which you can actually get your hands on it (in theory).

Fingerbobs

Neil_Jones wrote: »

£5 for regular 123 which is 1.5% Gross but that will cost £60 a year which effectively relages it to 1.2%

Only if you've got £20,000 in it.
The lower the balance, the lower the "effective" interest rate.

Nebulous2

Neil_Jones wrote: »

Santander 123 pays cashback like the Natwest account but some attract 1%, some 2%, some 3%. It comes with a lower monthly fee (£1 for Lite but the account pays no interest. £5 for regular 123 which is 1.5% Gross but that will cost £60 a year which effectively relages it to 1.2%).

Cashback on credit cards tends to be more towards the 'knock a portion off your outstanding balance' as opposed to bank account cashback which you can actually get your hands on it (in theory).

123 lite, which makes me about £8 net a month and Barclaycard reward at 0.5% for me. I didn't think the Barclaycard was available to new people though.

Barclaycard adds the cashback up over the year and pays out once a year. As I pay it off every month it's all real money. £50 off my monthly bill is just as real as £50 paid into my bank account.

PRAISETHESUN

Ignoring the semantics of if you consider it a discount off your bill or an extra cash bonus, I think overall the current account cashback deals for DD payments typically win over CC cashback deals. Whilst credit cards have better coverage on which bills you can get cashback on, unless you have an Amex or something, most CC cash backs tend to be in the realm of 0.5-1%. It might depend a bit on the value of your bills, but even with a monthly account fee the 1-3% for Santander/NatWest DD cashback will probably come out on top.

Another thing to consider is that some bills may be more expensive to pay be CC - some of the best electricity/gas tariffs for example are only payable by DD, so even if the cashback is less you will save more money overall by switching to them.

clivep

I opened my NatWest Reward current account in March 2017 as the DD cashback after £2/mth fee was better than Santander's 123 Lite after it's £1/mth fee.


My previous credit cards (Capital One then Santander then Nationwide) dropped their cashback rates so last November I started with the NatWest one as it had the best continuing cashback rate I could find and the £24/year charge is refunded for Reward current account customers.


(I also took out a TSB credit card as the cashback was slightly better but only for a limited amount and for a limited period so this has since been closed).


Between the utilities DD cashback and the credit card cashback my £2/mth fee gets me about £20/mth in NatWest rewards that I transfer monthly to my current account.




I've just completed helping my neighbour in setting up his new NatWest Reward current account and credit card. He had a spare Nationwide FlexDirect a/c where the 5% had finished so we used this in a switch to get the £125 incentive. He already held a NatWest Select a/c for many, many years but this did not stop him being eligible for the switching bonus.

Shoxt3r

Great, thank you all for your replies!

It looks like I'll be signing up to Natwest Rewards with a Rewards CC to boost the income in that case. As I've had Credit Cards in the past I'm aware of how to work them - I just setup a DD from my account and the rest takes care of itself, no interest to pay or anything, nice and easy .

Just doing some rough calculations it looks like I'll see a return of about £7 a month, plus maybe another £5-10 depending on my spending when using the Rewards CC.

A real shame that I don't have another account with someone else to grab the extra £125 incentive but oh well, can't have everything!

Many thanks!

EDIT: I take it there are no rewards received for mortgage DD taken from the account?

clivep

Shoxt3r wrote: »

It looks like I'll be signing up to Natwest Rewards with a Rewards CC to boost the income in that case. As I've had Credit Cards in the past I'm aware of how to work them - I just setup a DD from my account and the rest takes care of itself, no interest to pay or anything, nice and easy .

Be aware of a quirk with the NatWest CC when paying in full by DD - although payment is due 25 days from statement date, if you opt to pay in full by DD then this is taken 15 days after statement date.


Some people pay by FP nearer the payment due date to maximise the interest free period but personally I don't consider this worth the extra effort.

Shoxt3r

Yeah personally I've never seen the benefit of interest free - I always prefer to pay my bills up-front and in full wherever possible to avoid interest being paid and to know for certain that something is paid off. That way I also don't have to remember each month and can just monitor the DD payments.

Thanks for pointing out about the statement date vs payment date as well - I believe Barclaycard do something similar with their cards too.