The best and worst reward credit cards revealedEarn top rewards on your Christmas shopping

21 November 2011

Shopping - busy town centre 300x200

If you're heading to the shops to do some Christmas shopping, it pays to choose the best reward credit card - not all reward schemes are as a good as they appear

If you pay off your credit card bill every month, a reward card could pay you for using it. But watch out: not all reward credit cards are the same, with some big names offering a fraction of the perks available elsewhere.

Reward credit card winners

Reward cards pay a percentage of your spending as a bonus, redeemable as money-off vouchers, flights and days out, or, in the case of cashback cards, knocked off your credit card bill. Some 59% of Which? members now hold a supermarket-branded credit card, while 37% hold a retailer card.

Top of the table for rewards are high street giants BHS and House of Fraser, followed by online retailers and BHS offers a huge 5% reward on spending in-store, while House of Fraser pays 3% on shopping in its stores and a mighty 6% on spending at Both high street retailers' schemes come with a catch though – once sent to you, vouchers only last three months.

Reward credit card losers

The three biggest UK supermarkets battle it out for the turkey title this year. The Sainsbury's Nectar MasterCard offers a respectable 1% in-store, but an execrable 0.1% reward elsewhere, while the Asda Reward credit card pays 0.5% in-store and just 0.25% elsewhere. While Asda offers double rewards for the first three months, maximum annual cashback is just £50.

Tesco's reward scheme offers just 0.25% - the worst overall deal if you redeem your points in-store. On the plus side, however, the joint-longest 0% deal on new purchases.

0%-on-purchases cards

Most reward cards also offer an introductory 0%-on-purchases deal. So long as you make at least the minimum repayment each month, you can pay no interest on your shopping for up to 15 months. Marks & Spencer and Tesco Bank currently lead the field.

Cashback vs rewards credit cards

Retailer-branded reward cards tend to offer better reward rates in-store to encourage you to shop with them. If you're not loyal to one retailer or you want to earn your rewards in cash, a cashback card may be a better option. The money earned is usually knocked off your credit card bill, typically once a year. Virgin Money sends you a cheque instead.

The best card for your needs depends on how much you plan to spend. Big spenders may be attracted to the American Express cashback card – at 1.25%, it has the highest standard cashback rate. However, the annual fee of £25 means you'll have to spend £2,000 a year before you make a net profit.

If you're planning a big purchase, Capital One offers the best introductory cashback deal: 5% for the first 99 days. However, there's no point in spending more than £2,000 in the first three months as cashback is capped at £100 for the period. The more you spend after the three months are up, the higher the cashback rate, so this card is also suitable for big spenders. 

Virgin offers the best all-round deal for lower spenders as its cashback isn't tiered and there's no annual fee. The cashback rate is 0.8% if you take the money yourself, or 1% if you donate it to charity.

More on this...

  • 10 reward card pitfalls to avoid this Christmas - dodge the credit card dangers that could cost you ££s
  • High street 0% credit deals - the best 0% deals available from high-street retailers and ones to avoid
  • Store cards - read our review of all the major store cards and our tips to avoid paying too much interest