Barclaycard has revamped its Initial credit card
so that it now offers cashback on your spending.
The Initial card is designed to help borrowers build their credit rating, so you don't need to have an impeccable credit history to get hold of it. Instead you start with a low credit limit which may be increased later on depending on how you manage it.
For the first six months that you have the card, you will benefit from 3% cashback on all of your spending. This cashback is capped at £50, and there will be no cashback paid on spending after the first six months.
That's pretty good. But it's not the only credit builder credit card which offers a cashback reward on your spending. Let's take a look at another.
Aqua is a credit card provider which specialises in cards for borrowers with less than perfect credit histories.
And its Reward card is well worth a look, as it also pays 3% cashback. However, what sets it apart from Barclaycard's Initial card is the fact that there's no end date to the cashback you can earn on your spending. If you're still using it for your shopping in 2015, you'll still benefit from a 3% cashback rate.
It does cap how much cashback you can earn in a year at £100 though.
Other credit builder cards with additional benefits
The last few months have seen a lot of innovation in the credit builder card market, with cards launched that offer more than simply the chance to improve your credit record.
For example there's the Luma card
, which offers 0% interest on your purchases until February 2013. Normally interest-free deals are only available to borrowers with a squeaky clean borrowing past, so this is very different and allows you to spread your payments if you've got a fairly sizeable spend in prospect.
However, you want to make sure that the balance is cleared by the time the 0% period comes to an end, as otherwise you'll face a whopping 35.9% interest rate.
Aqua has another clever card in the shape of its Advance credit card
. You start with a punishing rate of interest of 34.9% APR. However, so long as you pay at least the minimum payment each month, on time, that rate is cut by 5% for the first three years you have the card, leaving you with a competitive 19.9% interest and an improved credit rating to boot.
The best cashback credit cards
However, if you have a decent credit record then there are better cashback cards on offer than the Barclaycard Initial.
For example, the Barclaycard Cashback Visa
pays a huge 6% on purchases in the first three months (capped at £120) and then 2% thereafter on your five biggest monthly purchases (0.5% on everything else). Each year that 2% rate doubles to 4% in your anniversary month with the card. There is a £24 annual fee though.
Then there's the American Express Platinum Cashback Everyday card
, which pays 5% cashback in the first three months, capped at £100. After that your cashback rate is tiered depending on how much you spend, up to 1.25%. And best of all there's no fee.
The Capital One Aspire World card
is very similar, offering 5% cashback in the first three months and tiered rates thereafter, though its tiers are a little higher than with the American Express.