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Best credit cards in the UK right now – and their rewards and benefits explained

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3 weeks ago

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Best credit cards in the UK right now – and their rewards and benefits explained

In cash-strapped times, it’s vital to take advantage of perks when they come along. 

If you’re debt-free and pay off regular credit card spending in full every month, why not sign up for one that offers benefits to boot? 

You can get things like cashback, accrue loyalty points to turn into vouchers, and even score airmiles just by doing your usual day-to-day spending. 

Reward credit cards work like standard credit cards in that they allow you to buy things in advance and pay them back as a lump sum in a monthly instalment. You should pay off the balance in full every month to avoid high APR (Annual Percentage Rates) rates, otherwise, the interest you’ll wind up owing will take the shine off the rewards.

Some cards draw you in with interest-free purchases for a limited period, which can be helpful ahead of major milestones like Christmas, weddings and birthdays. Just make sure you pay it all off before your term ends. 

Choosing which reward credit card to apply for depends on your personal circumstances, where you spend and your spending habits, and what rewards appeal the most to you; there isn’t a one-size-fits-all option here. 

The most popular cards will only be eligible for those with a top credit score. If you’re not sure where yours sits, there are plenty of eligibility checkers to visit online before you apply (plus they won’t show up as a footprint on your credit report).

Some shops like Sainsbury’s, John Lewis and Marks & Spencer offer reward credit cards, but if you don’t shop there often, it’s pointless to get one as the best rewards will very likely be tied to brand purchases. However, Sainsbury’s is part of the Nectar loyalty programme, so you can earn bonus points through credit card spending and by shopping at Nectar partners which can later be redeemed for things like flights.

There are three main types of rewards to get:

  • Cashback: this reward card gives you back a small percentage of your spending on a monthly or annual basis. How much you get depends on your terms: say your card pays 2% cashback on all purchases and you buy a TV for £400: your cashback would be £8 for that transaction.
  • Loyalty points: best used if you’re fond of a particular shop or brand, these cards allow you to collect points on purchases made in its shops which can later be redeemed for vouchers or other brand-only perks. It’s a loyalty card that you can use to pay for purchases too.
  • Airmiles: Like the idea of bringing down the cost of your annual getaway? A credit card that rewards with frequent flier points may be more up your street. American Express is the best example here, rewarding customers with Avios points earned from shopping at a range of partners. Once you’ve banked enough points, you can redeem them for a flight, car hire, hotel or days out – but you may have to pay some fees and taxes for flights, so it won’t be completely ‘free’. For example, the British Airways Amex offers an extra incentive to make its product your main purchasing card by issuing a free flight coupon, known as a companion voucher. You’ll get this reward if you spend a certain amount over 12 months. It’s an enticing offer, but if your spending doesn’t usually hit this figure, you should steer clear of applying for the card. 

Ultimately, never apply for a credit card if you can’t pay it off at the end of the month before interest hits. One thing that’s never rewarding? Debt.

We’ve taken a look at some of the most popular rewards-based credit cards on the market today to help you decide on your next step.

See the best credit cards with reward perks below.

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