Reward Credit Cards

Rewards cards are perfect for those cardholders who use their cards for purchases, and pay off their balance every month. Rewards on these cards come in many shapes and sizes, from money off particular products or services, to cash back, airmile points, and other more bespoke offers. Choose the card from the list below that will provide the most benefit for you.

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Credit Needed
Good
  • Reduced balance transfer fee of 2.30% (refunded from 4% fee charged, T&Cs apply) on transfers made within the first 3 months, 3% afterwards (min £3 at all times)
  • 5,000 bonus Nectar points for new customers using the card to spend £250 on Sainsbury's shopping or fuel in the first month. Apply by 26/03/2017
  • Must be a UK resident, aged 18 years or over, with a regular income and a good credit rating
  • Balance Transfers
    Intro
    0%
    42 Months
    2.30% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    Nectar Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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Credit Needed
Good
  • Earn Clubcard points wherever you use your Tesco Bank credit card and get your usual points in Tesco too (terms & conditions apply)
  • Apply online and get a decision within 60 seconds
  • You must not have applied for a Tesco Bank Credit Card in the last month or have an application currently in progress
  • You must be a UK resident, aged 18 years or over, have a good credit history and have an annual income of at least £5,000
  • Balance Transfers
    Intro
    0%
    3 Months
    2.90% Fee
    Purchases
    Intro
    0%
    17 Months
    Rewards
    Clubcard
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

  • 10% off online for a week from account opening with instant spend for qualifying customers (Terms Apply)
  • Plus enjoy 500 Bonus Points in your first statement (500 points = £5 Reward Voucher)
  • Earn Debenhams points - 3 points for every £1 you spend at Debenhams and debenhams.com and 1 point for every £2 you spend everywhere else
  • 0% for 12 months on balance transfers (2.99% fee applies - T&Cs apply) - transfers must be made within 6 weeks of account opening
  • Eligibility Criteria: Must be 18 years or over, a UK resident, have a current bank account and a home or mobile phone number, must not already hold a Debenhams credit card, must have a regular income
  • Balance Transfers
    Intro
    0%
    12 Months
    2.99% Fee
    Purchases
    Intro
    n/a
    Rewards
    Debenhams Points
    Annual Fee
    £0
    Representative APR (variable)
    24.9%
    APR

Representative Example: Representative 24.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 24.94% p.a. (variable)

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Credit Needed
Good
  • Earn unlimited cashback everywhere - 10% on selected Asda Money insurance products, *1% cashback on your Asda shopping & Asda fuel and 0.5% everywhere else
  • 0% on balance transfers for 12 months
  • 0% on purchases of £200 or more for 6 months at George.com
  • Get a FREE credit report for life
  • Contactless payment
  • You must be a UK resident, aged 18 years or over, have a household income of at least £10,000
  • Balance Transfers
    Intro
    0%
    12 Months
    2.90% Fee
    Purchases
    Intro
    0%
    6 Months†
    Rewards
    Cashback & Asda Discounts
    Annual Fee
    £0
    Representative APR (variable)
    19.9%
    APR

Representative Example: Representative 19.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 19.9% p.a. (variable)

  • Get 4% cashback on fuel when you spend over £500 a month on any purchase, or 2% cashback on fuel when you spend less than £500 a month - 0.5% cashback on all other purchases*
  • No annual fee for the first 12 months**
  • Includes AA Breakdown Cover in your first year, followed by an MOT every year you hold the card (existing customers get a free MOT in the first year instead of breakdown cover)

  • APR dependent on your personal circumstances
  • Must be a UK resident with annual income of at least £8,000, and no CCJs
  • AA Credit Cards are provided by the Bank of Ireland UK. AA Financial Services Limited is a credit broker and not a lender
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Cashback
    Annual Fee
    £42
    Representative APR (variable)
    22.4%
    APR

Representative Example: Representative 22.4% APR (variable). Based on an annual fee of £42 (after the first year), a credit limit of £1,200 and a purchase rate of 14.9% p.a. (variable)

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Credit Needed
Good
  • 0% on purchases and balance transfers for 12 months (with 0.15% balance transfer fee)
  • Rewards range from the high street, online favourites, places to eat and drink, to top entertainment and days out
  • Earn points wherever you shop with double Freedom points on your UK supermarket, petrol station and all Transport for London spend, plus triple points at selected Freedom partners (see issuer's website for details)
  • Apple Pay enabled payments
  • You must be a UK resident, aged 18 years or over, with a good credit rating
  • To qualify for both a 0% interest rate on balance transfers for a year and £20 worth of bonus Freedom points, you will need to transfer a balance of at least £500 within the first 60 days of opening your account
  • Balance Transfers
    Intro
    0%
    12 Months
    0.15% Fee
    Purchases
    Intro
    0%
    12 Months
    Rewards
    Freedom Rewards
    Annual Fee
    £0
    Representative APR (variable)
    21.9%
    APR

Representative Example: Representative 21.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 21.9% p.a. (variable)

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Credit Needed
Excellent
  • Nectar card holder exclusive: Reduced balance transfer fee of 1.78% (refunded from 2.89% fee charged, T&Cs apply) on transfers made within your first 3 months, 3% afterwards (min £3 at all times)
  • 5,000 bonus Nectar points for new customers using the card to spend £250 on Sainsbury's shopping or fuel in the first month. Apply by 26/03/2017
  • Only available to Nectar card holders
  • Must be a UK resident and aged 18 years or over
  • Balance Transfers
    Intro
    0%
    40 Months
    1.78% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    Nectar Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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Credit Needed
Good
  • 0% on balance transfers for 40 months from account opening
  • 2.69% balance transfer fee applies
  • The 0% offer is applied to any balances transferred within the first 90 days of opening your account
  • The APR, length of promotional offer, and credit limit may vary as they are dependent on your personal circumstances
  • You must not have applied for a Tesco Bank Credit Card in the last month or have an application currently in progress
  • You must be a UK resident, have a good credit history, and an annual income of at least £5,000
  • Balance Transfers
    Intro
    0%
    40 Months
    2.69% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    Clubcard Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

 APPLY ONLINE

Credit Needed
Excellent
  • Reduced balance transfer fee of 2.89% applies on transfers made within your first 3 months, 3% afterwards (min £3 at all times)
  • 5,000 bonus Nectar points for new customers using the card to spend £250 on Sainsbury's shopping or fuel in the first month. Apply by 26/03/2017
  • Must be a UK resident and aged 18 years or over
  • Balance Transfers
    Intro
    0%
    40 Months
    2.89% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    Nectar Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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Credit Needed
Good
  • 5,000 bonus Avios when spending £1,000 within the first 3 months of Cardmembership
  • Earn 1 Avios for virtually every £1 you spend
  • Companion Voucher when you spend £20,000 per anniversary year
  • Automatic enrolment to the British Airways Executive Club
  • Apple Pay enabled payments
  • You must be a UK resident, aged 18 years or over and have no history of bad debt
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Avios
    Annual Fee
    £0
    Representative APR (variable)
    22.9%
    APR

Representative Example: Representative 22.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 22.9% p.a. (variable)

  • Earn 1% Reward on all Supermarket spend and 0.5% at their petrol stations
  • At least 1% at MyRewards Retailers and 0.5% everywhere else you shop at home and abroad
  • Earn an extra 1% when you pay contactlessly or use Apple Pay - Offer ends 31st March 2017
  • MasterCard contactless enabled
  • Apple Pay enabled payments
  • £24 Annual Fee*
  • Receive a £24 refund on the annual fee when you hold a Reward or Reward Black current account
  • You must be a UK resident, aged 18 or over, and have an annual income of at least £10,000
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Cashback
    Annual Fee
    £24
    Representative APR (variable)
    23.7%
    APR

Representative Example: Representative 23.7% APR (variable). Based on an annual fee of £24, a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

 APPLY ONLINE

Credit Needed
Good
  • 3% balance transfer fee applies (min £3 at all times)
  • 5,000 bonus Nectar points for new customers using the card to spend £250 on Sainsbury's shopping or fuel in the first month. Apply by 26/03/2017
  • Must be a UK resident and aged 18 years or over
  • Balance Transfers
    Intro
    0%
    18 Months
    3.00% Fee
    Purchases
    Intro
    0%
    29 Months
    Rewards
    Nectar Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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Credit Needed
Good
  • 0% interest on balance transfers and purchases (no fee on balance transfers)
  • 5.85% p.a. (variable) interest on purchases and balance transfers
  • No annual fee
  • Additional security shopping online with MasterCard® SecureCode™
  • Mobile Servicing app to keep track of your spending and available credit
  • Contactless payments
  • APR dependent on your personal circumstances
  • Must be a UK resident with annual income of at least £8,000, and no CCJs
  • AA Credit Cards are provided by the Bank of Ireland UK. AA Financial Services Limited is a credit broker and not a lender
  • Balance Transfers
    Intro
    0%
    3 Months
    0.00% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    No Rewards
    Annual Fee
    £0
    Representative APR (variable)
    5.85%
    APR

Representative Example: Representative 5.85% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 5.85% p.a. (variable)

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Credit Needed
Good
  • 0% for 41 months on balance transfers (3.25% fee applies)
  • Balance transfers must be made within 3 months of account opening
  • 0% for 3 months on purchases from account opening
  • APR dependent on your personal circumstances
  • Must be a UK resident with an annual income of at least £8,000, and no CCJs
  • AA Credit Cards are provided by the Bank of Ireland UK. AA Financial Services Limited is a credit broker and not a lender
  • Balance Transfers
    Intro
    0%
    41 Months
    3.25% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    n/a
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

  • 32 months interest free on balance transfers (0.99% fee, min £5)
  • 0% interest on shopping for 6 months
  • Use your credit card when you buy your travel money and you will not have to pay the standard 2% fee
  • M&S rewards - earn M&S points every time you shop with your card
  • To apply for an M&S Credit Card you have to be a UK resident aged 18 or over
  • A new M&S Credit Card account cannot be opened if you have held a credit card with us within the previous 12 months
  • Balance Transfers
    Intro
    0%
    32 Months
    0.99% Fee
    Purchases
    Intro
    0%
    6 Months
    Rewards
    Reward points & travel discounts
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

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Credit Needed
Good
  • £35 cashback when you spend £500 or more within 60 days of account opening
  • 0% on all purchases for 28 months from the date your account is opened. To qualify, a transaction must be made within the first 3 months, otherwise the promotional period will be reduced to 14 months
  • 0% on balance transfers for 18 months made in the first 3 months. A 2.89% balance transfer fee applies which will increase the total amount that you owe
  • Mobile servicing app to keep track of your balance and available credit
  • Additional security shopping online with MasterCard® SecureCode™
  • Contactless payments
  • APR dependent on your personal circumstances
  • Must be a UK resident with annual income of at least £8,000, and no CCJs
  • AA Credit Cards are provided by the Bank of Ireland UK. AA Financial Services Limited is a credit broker and not a lender
  • Balance Transfers
    Intro
    0%
    18 Months
    2.89% Fee
    Purchases
    Intro
    0%
    28 Months
    Rewards
    No Rewards
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

  • Earn unlimited cashback everywhere - 10% on selected Asda Money insurance products, 2% cashback on your Asda shopping & Asda fuel and 1% everywhere else
  • 0% on balance transfers for 15 months
  • 0% on purchases of £200 or more for 6 months at George.com
  • Get a FREE credit report for life
  • Contactless payment
  • £3 monthly fee
  • You must be a UK resident, aged 18 years or over, have a household income of at least £10,000
  • Balance Transfers
    Intro
    0%
    15 Months
    3.00% Fee
    Purchases
    Intro
    n/a
    Rewards
    Cashback & Asda Discounts
    Annual Fee
    £36
    Representative APR (variable)
    26.2%
    APR

Representative Example: Representative 26.2% APR (variable). Based on an annual fee of £36, a credit limit of £1,200 and a purchase rate of 19.9% p.a. (variable)

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Credit Needed
Good
  • Double Choice points on eligible spend for first 6 months on your American Express card
  • Collect 10 Choice points for every £1 of eligible spend on the Choice Rewards American Express card and 10 Choice points for every £5 of eligible spend on the Choice Rewards MasterCard
  • 0% interest on balance transfers for 32 months (3% fee) and 0% interest on purchases for 12 months
  • Apple Pay enabled payments
  • You must be a UK resident, aged 18 years or over, have a regular income, be free from CCJs, bankruptcy, and not be subject to an IVA
  • £24 annual fee
  • Balance Transfers
    Intro
    0%
    32 Months
    3.00% Fee
    Purchases
    Intro
    0%
    12 Months
    Rewards
    Reward Points
    Annual Fee
    £24
    Representative APR (variable)
    23.7%
    APR

Representative Example: Representative 23.70% APR (variable). Based on an annual fee of £24, a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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Credit Needed
Good
  • A bonus points voucher for 500 M&S points worth £5 when you spend in food, clothing or home at M&S
  • 0% on balance transfers and purchases for 25 months
  • Use your credit card when you buy your travel money and you will not have to pay the standard 2% fee
  • M&S rewards - earn M&S points every time you shop with your card
  • To apply for an M&S Credit Card you have to be a UK resident aged 18 or over
  • A new M&S Credit Card account cannot be opened if you have held a credit card with us within the previous 12 months
  • Balance Transfers
    Intro
    0%
    25 Months
    2.90% Fee
    Purchases
    Intro
    0%
    25 Months
    Rewards
    Reward points & travel discounts
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

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Credit Needed
Excellent
  • Get a rocking 5% cashback up to £125 cashback for your first 3 months of Cardmembership
  • Earn up to 1.25% cashback if you spend over £10,001 (and 1% on all purchases under that amount)
  • Apple Pay enabled payments
  • £25 Annual Fee
  • You must be a UK resident, aged 18 years or over and have no history of bad debt
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Cashback
    Annual Fee
    £25
    Representative APR (variable)
    28.2%
    APR

Representative Example: Representative 28.2% APR (variable). Based on an annual fee of £25, a credit limit of £1,200 and a purchase rate of 22.9% p.a. (variable)

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Credit Needed
Excellent
  • Earn a 10,000 Starpoints bonus when you spend £1,000 in your first 3 months of cardmembership
  • Receive a free weekend night when you spend £25,000
  • Automatic upgrade to SPG Gold Preferred status when you spend £15,000 in purchases on your Card each year
  • Global Assist® provides help when you travel outside the UK, in your own language, 24/7
  • Earn 1 Starpoint everywhere you spend
  • £75 annual fee
  • Excellent credit rating required
  • You must be a UK resident, aged 18 years or over and have no history of bad debt
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Reward Points
    Annual Fee
    £75
    Representative APR (variable)
    36.2%
    APR

Representative Example: Representative 36.2% APR (variable). Based on an annual fee of £75, a credit limit of £1,200 and a purchase rate of 19.9% p.a. (variable)

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Credit Needed
Good
  • Earn 1% Reward on all Supermarket spend and 0.5% at their petrol stations
  • At least 1% at MyRewards Retailers and 0.5% everywhere else you shop at home and abroad
  • Earn an extra 1% when you pay contactlessly or use Apple Pay - Offer ends 31st March 2017
  • MasterCard contactless enabled
  • Apple Pay enabled payments
  • £24 Annual Fee*
  • Receive a £24 refund on the annual fee when you hold a Reward or Reward Black current account
  • You must be a UK resident, aged 18 or over, and have an annual income of at least £10,000
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Cashback
    Annual Fee
    £24
    Representative APR (variable)
    23.7%
    APR

Representative Example: Representative 23.7% APR (variable). Based on an annual fee of £24, a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

 APPLY ONLINE

Credit Needed
Good
  • 3% balance transfer fee (min £3 at all times)
  • 5,000 bonus Nectar points for new customers using the card to spend £250 on Sainsbury's shopping or fuel in the first month. Apply by 26/03/2017
  • Must be a UK resident and aged 18 years or over
  • Balance Transfers
    Intro
    0%
    28 Months
    3.00% Fee
    Purchases
    Intro
    0%
    28 Months
    Rewards
    Nectar Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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Credit Needed
Excellent
  • No fee for the first year (normally £25)
  • 20,000 Nectar bonus points welcome offer - worth £100 to spend with Nectar partners when you spend £2,000 on your account in the first three months
  • Collect 2 Nectar points for almost every £1 you spend
  • Collect 4 points for virtually every full £1 spent at Nectar partners
  • Complimentary Supplementary cards for a family member, so you can collect even more Nectar points
  • Apple Pay enabled payments
  • You must be a UK resident, aged 18 years or over and have no history of bad debt
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Nectar Points
    Annual Fee
    £25*
    Representative APR (variable)
    25%
    APR

Representative Example: Representative 25.0% APR (variable). Based on an annual fee of £25, a credit limit of £1,200 and a purchase rate of 19.9% p.a. (variable)

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Credit Needed
Good
  • Earn a free night e-certificate for one weekend night at participating Hilton hotels when you spend £750 in the first 90 days
  • Enjoy HHonors Silver status for as long as you are a card member
  • Earn 3 HHonors Bonus Points for every £1 you spend at any Hilton Worldwide portfolio hotel or resort and 2 HHonors Bonus Points for every £1 you spend on everyday purchases
  • Earn 2,500 HHonors Bonus Points for each of your first 4 stays at a hotel or resort within the Hilton Worldwide portfolio
  • You must be a UK resident, aged 18 years or over and have a good credit rating
  • Balance Transfers
    Intro
    0%
    15 Months
    2.99% Fee
    Purchases
    Intro
    n/a
    Rewards
    Hilton Rewards
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.9% p.a. (variable)

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Credit Needed
Excellent
  • Get a rocking 5% cashback for your first 3 months of Cardmembership (up to £100)*
  • After the first 3 months of Cardmembership you will earn up to 1% cashback, depending on how much you spend on the card
  • No Annual Fee
  • Apple Pay enabled payments
  • You must be a UK resident, aged 18 years or over and have no history of bad debt

*As long as you spend a minimum of £3,000 in a year, every full pound you spend on purchases qualifies for cashback
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Cashback
    Annual Fee
    £0
    Representative APR (variable)
    22.9%
    APR

Representative Example: Representative 22.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 22.9% p.a. (variable)

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Credit Needed
Excellent
  • 25,000 bonus Avios when spending £3,000 within the first 3 months of Cardmembership
  • 1.5 Avios for virtually every £1 you spend
  • Companion voucher when you spend £10,000 each card anniversary year
  • Automatic enrolment to the British Airways Executive Club
  • Apple Pay enabled payments
  • You must be a UK resident and have no history of bad debt
  • Balance Transfers
    Intro
    n/a
    Purchases
    Intro
    n/a
    Rewards
    Avios
    Annual Fee
    £195
    Representative APR (variable)
    76%
    APR

Representative Example: Representative 76.00% APR (variable). Based on an annual fee of £195, a credit limit of £1,200 and a purchase rate of 22.9% p.a. (variable)

  • Reduced balance transfer fee of 0.59% (refunded from 1.5% fee charged, T&Cs apply) on transfers made within the first 3 months, 3% afterwards (min £3 at all times)
  • 5,000 bonus Nectar points for new customers using the card to spend £250 on Sainsbury's shopping or fuel in the first month. Apply by 26/03/2017
  • Must be a UK resident and aged 18 years or over
  • Balance Transfers
    Intro
    0%
    33 Months
    0.59% Fee
    Purchases
    Intro
    0%
    3 Months
    Rewards
    Nectar Points
    Annual Fee
    £0
    Representative APR (variable)
    18.9%
    APR

Representative Example: Representative 18.9% APR (variable). Based on a credit limit of £1,200 and a purchase rate of 18.95% p.a. (variable)

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What are rewards credit cards?

Reward credit cards are products that offer ‘rewards’ to people for using their credit card to make purchases. The actual rewards can vary greatly depending on the specific credit card issuer and product. Some offer loyalty points towards popular reward programs (eg. Supermarket), whilst others offer cashback on purchases, but all reward credit cards offer benefits which are directly linked to the amount a customer spends on their card.

How do rewards credit cards work?

Although the rise in popularity of the 0% balance transfers, since the early 1990's, has resulted in many people using their credit card as a cheap loan alternative, credit cards were originally intended to be a more straightforward and convenient method of payment. Retailers and other businesses would accept the use of credit cards because it encouraged customers to spend, but there was always a cost to those businesses accepting credit cards in the form of an 'interchange fee'.

The ‘Interchange Fee’ is the charge to businesses for accepting card payments, to cover the processing and associated infrastructure costs. Originally processing a credit card was a labour-intensive manual process, requiring people to physically process paper based transaction records. These processing/interchange costs were therefore passed on to businesses, as a fee calculated as a percentage of the overall transaction. In this way interchange has always been directly linked to the benefit of the business accepting the payment derived from the sale.

As technological improvements helped automate the payment processing, the costs associated with interchange by the payment networks (Visa, MasterCard, American Express) and passed on to the credit card issuers have reduced considerably. This has helped processors to reduce the cost of interchange to businesses, but it has also enabled credit card issuers to use funds received for interchange to develop reward programs to help acquire new customers, and engender loyalty amongst existing card holders.

Although reward cards often appear to be very different (appealing to very different customers), they are in fact very similar. The rewards earned might take any number of different forms; cashback, loyalty program points, air miles or contributions to charities, football clubs or other organisations, but in every instance card holders earn rewards for spending.

Reward credit card comparison

Although reward credit cards appear to offer their holders 'something for nothing', there are some considerations which should be pondered upon, before making a decision on which rewards are most appealing.

Indeed, for many people in the UK who struggle to clear their credit card balance on a monthly basis, a reward credit card is unlikely to be any value whatsoever. This is because the cost of interest they will accrue on their credit card balance will far outweigh any monetary value of the rewards they might receive.

Individuals who regularly fail to clear their card balance should instead look to minimise the cost of the interest they are incurring with a low rate of standard interest or 0% purchase credit card (or consider whether a credit card is right for their circumstances at all).

Reward credit cards are therefore best suited to people who can confidently clear their balance every month, and therefore incur no cost for earning the rewards they receive.

There are of course, given the abundance of choice in the UK credit card market, some credit cards that couple rewards with an introductory 0% on new purchases. These can be a useful tool for people with more erratic incomes, who may not clear a balance month-to-month, but are very confident it can be cleared relatively quickly. Of course, the danger with these products is that they might encourage individuals to overspend and become ever more indebted, as they focus on the rewards they will receive. So the best guidance is to avoid reward cards when a balance cannot be cleared in full every month, without fail.

Which reward credit card is best?

Given the breadth of choice available in the UK rewards credit card market, most applicants are likely to find cards that offer rewards which enhance their lifestyle. Indeed, many people will discover that a number of different cards are of interest to them.

Where there is a clear choice to be made between specific rewards it is wise to impartially consider which is likely to offer the greatest level of practical return.

For example, many people like the principle of getting a charity credit card - being able to contribute to a favoured charity as they spend initially appears attractive. Nevertheless, impassive comparison of all rewards card products often shows that charities might be better served by donors who use more conventional cashback credit card products to achieve a higher rate of cashback, which they can then donate to their chosen charity (often with the added benefit of gift aid).

Equally, air mile credit cards often offer customers generous incentives to apply, but if the airline in question does not fly anywhere of interest to the card holder, the air miles that they earn are likely to be unused and wasted.

It is perhaps for these reasons that traditional supermarket loyalty schemes credit cards are becoming increasing popular. Familiarity with the schemes, and the breadth of the range of goods and services that points can be exchanged for, reduce the time card holders would otherwise have to spend familiarising themselves with bespoke schemes, making them very convenient.

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