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Best and worst reward cards revealed by Which?

Shrewd shoppers can earn nearly £300 a year

credit cards

Several providers have withdrawn or reduced cashback credit card deals

It’s still possible to earn hundreds of pounds a year through reward cards despite a drop in the number of deals on offer.

A Which? Money investigation looked into the reward cards market and found there are still products worth considering – as long as you work out which one will be most appropriate for your spending habits.

Find out more: compare hundreds of credit cards with Which? Money Compare

Best reward cards

Using the average Which? member monthly reward card spend of £1,080, we calculated how much a cardholder could potentially earn in the first year of owning a reward card after fees have been deducted. We started by looking at every card on the market, and then narrowed it down to the cards suited to the following two scenarios:

  1. The shopper spends half of their total monthly spend with one retailer and the rest elsewhere
  2. The shopper spends a quarter of their total monthly spend with one retailer and the rest elsewhere

For those who are more loyal to one retailer (scenario one), the American Express Nectar card came out top with a total reward of £294. Natwest’s Reward Black Mastercard, meanwhile, would give you a reward of just £13.

With scenario two, the Lloyd’s Bank Choice Rewards American Express card could be worth £268, while the Tesco Bank Premium Mastercard will leave you out of pocket to the tune of £61 once its £150 annual fee is taken into account.

Find out more: compare balance transfer and 0% purchase cards

What are reward cards?

When used correctly, reward cards can be a great way of earning as you spend. Some pay cashback while others award points which can then be converted into vouchers and spent in any stores that the card is associated with. 

However, it can be difficult to compare reward schemes as you’ll accrue points at different rates depending on the card, and some come with annual fees.

The market is also not what it once was. Since December 2015, the fees card firms can charge retailers to process customer transactions have been capped, which providers including RBS, Tesco Bank and M&S Bank have cited as a reason for scaling back their reward schemes. Capital One meanwhile has stopped offering its cashback and reward cards to new customers.

Find out more: should you get a credit card?

How to choose a reward card

To get the most out of any reward scheme, there are a number of golden rules you should follow:

  • Do use your card for everyday spending but make sure you stick to your usual spend
  • Do clear the balance in full every month or you could be charged interest, which will likely cancel out any benefits
  • Do check the expiry dates on vouchers as some can be as short as a couple of months
  • Don’t let annual fees outweigh rewards – you could end up losing money instead of making it

Harry Rose, editor of Which? Money, said: ‘Some banks have cut back their credit card reward schemes but they can still make you money. It is notoriously hard to compare the benefits of different cards, though, so make sure you understand how a scheme works and whether the point system fits with your spending habits.’

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Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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