Barclaycard launches 6% cashback cards
Filed under: Credit Cards
The world of cashback credit cards is getting ever more competitive. Earlier this month Sainsbury's launched a card that paid 5% cashback for the first three months you have the card.
Once the initial three-month period is over, the Barclaycard Cashback card will pay you 2% on your five biggest transactions each month and 0.5% on all your other purchases. Barclaycard thinks that the 2% rate will apply to around half the average person's spending.
That 2% rate will double to 4% for one month each year, to mark your anniversary with the card.
There are two downsides, however. Firstly, you have to make at least 15 purchases in a month to qualify for the 2% rate.
That's a pain as I can easily imagine myself spending, say, £800 on air tickets and then finding that I'd only made 13 purchases in that month. So I'd only get 0.5% cashback on the tickets instead of 2%. In other words, I'd only get £4 instead of £16.
And secondly, you'll have to pay a £24 annual fee. Now if you're a big spender, you'll easily make a profit on the card, but I'm sure the fee will put off a lot of potential customers.
So how does the Barclaycard compare with the competition?
Aqua Reward MasterCard
The aqua Reward Mastercard doesn't charge a fee and pays a very generous 3% cashback rate, which is fantastic for a free card.
However, your maximum cashback payment is £100 a year. In other words, you'll only get cashback on spending up to a £3,333 limit.
Capital One Aspire World
The Capital One Aspire World card doesn't have a spending limit and you'll get 5% cashback for the first three months you have the card.
Once that period is over though, you'll get tiered cashback up to a maximum of 1.25% - the cashback rate depends on how much spending you do. This card is also free.
Sainsbury's Cashback Credit Card
The Sainsbury's Cashback Credit Card is another card that pays 5% in the first three months – although that only applies to spending at Sainsbury's. This introductory cashback is also capped at £50 per month.
What's more, there is a £5 a month cashback reward each month when you spend at least £250 at Sainsbury's and £250 elsewhere. This monthly payment isn't an introductory deal.
Best of all, there's no fee with this card either.
I can see that this card might be attractive for keen Sainsbury's shoppers, but I'm not going to go for it. I sometimes shop at Sainsbury's but I never spend £250 there in a month.
American Express Platinum Cashback
Sadly you have to pay a £25 annual free for the American Express Platinum Cashback card.
But you'll get 5% cashback for the first three months you have the card – up to a maximum of £100. And after that you'll get 1.25% on all spending with no cap. For one month a year, that rate will rise to 2.5%.
Santander 123 card
The Santander 123 Cashback MasterCard pays 1% on supermarket spending, 2% in department stores and 3% on petrol or train fares. (The petrol or train fare element is capped at £9 cashback per month).
There's a £24 annual fee.
I suspect that the Barclaycard will appeal to many big spenders. The introductory 6% rate is very strong, and 2% on your big purchases is very attractive too.
But if you don't spend so much on your credit card, the aqua card looks very good. 3% cashback with no fee is a great combination.
Barclaycard is also launching a new rewards card – the Barclaycard Freedom Rewards card.
This card has several pluses:
- You'll earn double reward points on all your grocery and petrol spending, regardless of store.
You can find out more about the rival reward cards in The best reward credit cards.
Cashback is king
I can see that the Barclaycard Rewards card will appeal to some folk, but personally I'd always go for cashback. Then I've got total freedom on how to spend my reward.
I'm tempted by the Barclaycard Cashback card but I know that I'll have to change my habits and make more purchases using my credit card. Currently I still use cash or my debit card a fair bit. If I don't change my payment habits, I won't hit the threshold of 15 purchases a month.
I guess I've got to decide whether 2% monthly cashback is a big enough incentive for me to change my ways.
- New 5% cashback credit card from Sainsbury's
- Contactless payments: the end for cash?
- Why a 0% credit card could mean 100% trouble
- Compare credit card deals