Cashback credit card spending should be kept in check

03 September 2009 / by Andy Davies

Borrowers are being urged to stay in control of their spending to reap the rewards of cashback credit cards.

Moneyfacts has welcomed the move by providers to reward customer spending but stresses that cardholders should be fully aware of the cards' terms and conditions.

American Express recently launched a new Platinum Cash Back Card offering five per cent cashback on purchases for the first three months and up to 1.25 per cent thereafter, while Barclaycard and Egg have also launched credit cards offering one per cent cash back on purchases.

The independent personal finance information provider believes these three new cards could suggest a new period of growth in the cashback credit card market, but Louise Holmes, spokesperson for Moneyfacts.co.uk, urged borrowers to be cautious with their spending.

She said: "Be confident that you can pay off the balance in full each month and not just pay the minimum repayment. If monthly payments are missed regularly, any benefits such as cash back or introductory deals which rely on good account conduct will be removed by the provider."

Ms Holmes says cardholders should avoid withdrawing cash on credit cards as these can have higher interest charges compared to charges on purchases.

"If you do have short term cash needs, then it may be worth asking your bank the rate they charge to dip into your overdraft, as this is likely to work out cheaper," she said.

But she added: "If managed efficiently, customers can enjoy a host of benefits from their card including cashback, vouchers, air miles and interest rebates."


© Fair Investment Company Ltd