subject: Cashback cards: The best way to spend [print this page] Cashback cards: The best way to spend Cashback cards: The best way to spend
Always set up a direct debit to pay the card off in full each month, so you'll never pay interest, otherwise that more than wipes out any gain.
The reason card companies offer cashback or any reward scheme is simple, they want to encourage you to spend on the card so they can earn interest from it. The interest cost of all cashback cards dwarves the cashback you'll earn.
Therefore before applying for a cashback card answer these two questions...
Are you sometimes unable to repay cards in full? If you can't repay in full every month, instead focus on a card with a lower interest rate instead, see the
Do you have existing credit card debts? Here you'll save more money by keeping them cheap, than going for cashback. And as applying for any financial product has a minor credit score ensure they're sorted out before applying for a cashback card
The easy way to pay off in full.
The best way to pay off in full each month is via a Direct Debit, which unlike a standing order, allows the card company to take a variable amount each month to correspond with what you owe it
Sadly a few card providers deliberately miss the 'pay off in full' option off their Direct Debit forms, as it means they'll make less money; if that happens just write in pay off in full' and send it in. The rules mean they should honour it, though do call up after a week or so and check it's in place.
Once this is done, your credit card has effectively become a Debit card, yet one that pays you every time you spend on it. While they don't like it, credit card companies don't lose money as they charge retailers every time someone uses one of their cards. In many ways using this technique, you're effectively claiming much of that retailer's fee for yourself.
Get more free cash from credit card companies.
Credit card companies throw serious cash at marketing in order to get their cards in our pockets. For those who don't need to borrow it's possible to ride this wave of freebies to be quids in. There are two other ways to make money from credit cards.
Stoozing. This is an advanced technique where you can make serious cash. It takes advantage of the fact that many credit cards will lend you money for a short time at 0% interest. If you take that money and save it in a high interest account you'll be quids in.
Credit Card Freebies. Many credit cards offer incentives like free flights or electronic goods for you to sign up to the card. Therefore if you've a good credit score, just take advantage by signing up even if you don't want the card.
