Advice on cashback credit cards

jojopop_2

Hi,

I used to only use the nationwide credit card, until they cut their cashback to 0.25%

Then I got a AMEX cashback credit card and was using that but they also cut their cashback rate (after all the bonus periods) to 0.5% I think.

So wanted to check what the general advice on cashback credit cards are? Especially AMEX.

Should I cancel cards where the cashback rate is not competitive and get the card that pays the most cashback, which at the moment seems to be the Chase debit card with 1% cashback and use that going forward? And if I want to make some big purchases in the future I should apply for AMEX again after two years to be eligible for the bonus cashback rates.

Is that what people generally do? I read people used to cancel and reapply to AMEX more often but now they've increased the period between which one is eligible for bonus rates so doesn't seem possible anymore.

WillPS

You can do a little shuffle. Unless you spend huge sums Amex cards are most lucrative if you churn them - go for bonuses, then cancel, go fallow and reapply once the 2 year lockout period has expired. Obviously there's risk that your circumstances will change negatively and/or they'll decide they don't want your business, but there's little evidence thusfar of Amex doing anything other than welcoming returning customers for the mostpart.

Alternatively if you want a better ongoing deal you could switch the Nectar Amex card, which is effectively a flat 1% reward card - the rewards can normally only be spent at Sainsburys, Argos or Ebay - I tend to spend mine on diesel which is basically impossible to get cheaper (where I live) to ensure I'm getting full value. £30/year annual fee, waived in the first year - so it's only really worth considering if you spend more than £6000/year otherwise 0.5% cashback is probably still a better year.

My wife and I split the difference - she has had a Nectar Amex card for many years which I'm a supplementary cardholder on. This is our 'default' card most of the time.

I then go for bonuses, adding her as a second cardholder wherever I go - we then spend on those until they're done when I promptly cancel, keeping note of when I do so I know when I will likely be eligible again.

Some other non-Amex options worth looking at:

• Barclaycard free Avios card. 1 Avios per £, convertible to Nectar automatically giving an effective rate of 0.5%. 
• Santander Edge Credit Card. 2% cashback for the first year, 1% cashback thereafter. Max £15/month cashback. £3/month fee. Works out as 1.6% effectively on spend of exactly £750 in the first year.
• Natwest or RBS Reward Credit Card - 1% in "supermarkets", 0.25% elsewhere. Fee waived if you hold a matching reward current account

Finally - as you mention - if you don't need a credit card then Chase will pay 1% cashback on most debit card spend, up to £15/month. I don't know about 'most' but I prefer the experience of settling up my spend each month from a budgeting perspective,  it also allows me to leave my money longest where it'll earn decent interest. Now that easy access interest rates are decent this is more than a trivial advantage.

lr1277

This article might be helpful. It is about 1 year old and reviews the two Amex cashback cards:

https://www.headforpoints.com/2023/03/25/review-american-express-platinum-cashback-credit-cards-4/ 

However the above site focuses on cards that generate points for hotels, airlines or even card points. But as you can see they occassionally cover cashback cards.

I am puzzled by people wanting to cancel then re-apply  for the cashback card. First when you re-apply the terms may have changed and no longer be desirable.

Also in the 2 year fallow period, how much cashback could you earn? Would that be more than the sign-up bonus? If that is not the case, I would think you are not spending enough on the cashback card.

Cancelling and re-applying in my estimation is for people wanting cards that give airline/hotel/card points. Because the sign up bonus (SUB) can be so much more than the rewards from somebody's annual spend.

fatbelly

Check if you can apply through Quidco/Topcashbach for extra cashback.

Depending on where you shop, Asda/johnlewis/tesco cards can be useful

jojopop_2

Thanks all, that's useful advice.

I've considered the avois points in the past and decided against it mainly because it seemed like the benefits were things I would normally not purchase with money so then it's not really saving me money but rather creating the need to spend for things I don't generally need like flight upgrades, lounges, hotels that are part of the scheme which are generally more expensive, etc.

So I think I'll cancel my AMEX for now and go with Chase or one of the other cards mentioned.

WillPS

lr1277 said:

I am puzzled by people wanting to cancel then re-apply  for the cashback card. First when you re-apply the terms may have changed and no longer be desirable.

They'll have changed the terms for existing customers too tho in that case, most likely.

lr1277 said:

Also in the 2 year fallow period, how much cashback could you earn? Would that be more than the sign-up bonus? If that is not the case, I would think you are not spending enough on the cashback card.

(a) there are many other cashback card providers. 0.5% can be matched quite easily
(b) pretending Amex cashback is the only game in town, the £100 SUB would take £20k of spend at 0.5% to match. That's a chunky sum, even spread over 2 years.

lr1277 said:

Cancelling and re-applying in my estimation is for people wanting cards that give airline/hotel/card points. Because the sign up bonus (SUB) can be so much more than the rewards from somebody's annual spend.

I disagree strongly - it's the optimum strategy regardless of reward preference. My wife and I don't fly and there are no hotel reward cards available in the UK - so for us it's all about cash or close to cash (Nectar etc). We've made thousands of pounds of actual cash from rinsing sign up bonuses as rapidly as possible in the last decade.