Can someone explain the purpose of Cashback?

[ggmopa]

I am looking in togetting my first ever credit card. Reading some random posts on Reddit, they claim some of the advantages include being able to 'save money' or even 'make money' through cashback and rewards.

I'm looking at Cashback specfically over rewards as I don't really spend much with mainstream vendors and the best rate I see right now is 0.5% with Amex. 0.5%. So basically you'll be 'earning' 50 Cents for every $1000 dollars you spend? Another example are the banks with cashback deals. Best one I saw was 2%. Ok so inflation is sitting at 3.6% so that' s a start and nice surprise compared to the >1% cashback offer i'm seeing... except it's capped at £30 pound per year.

Edit: just came across another Amex deal of 0.75% which comes with an annual feel of £25 which means you'll need to spend a good £20k a year just to break even.


People have been advertising cashback for eons and I feel like i'm missing something here because those don't seem like very good deals at all and they are the 'top' offers rights now

 

[roydan]

50 Cents for every $1000 dollars you spend?

50 cents for every $100

just came across another Amex deal of 0.75% which comes with an annual feel of £25 which means you'll need to spend a good £20k a year just to break even.

You'll have to spend £3333 per year.


It's not that appealing, but it's not as bas as you thought.

 

[ggmopa]

50 cents for every $100

Ah, yes I do stand corrected. It was a typo though honest.

You'll have to spend £3333 per year.

It's not that appealing, but it's not as bas as you thought.

Sorry, forgot to add, it's 1.25% above 10k expenditure. So I don't know, I think I might be in the right region couldn't be bothered working it out.

You are right though, maybe enough to save up for a big mac or two once a year I guess

Just the reaosn they advertise they'll give you 50 cents for every 100 dollars is a mystery so wondered if I missed something.

 

[t2van]

Credit cards...

You working or can pay it off? if not it's a fast trap as a student to ruin remember takes 6 years to come off your record and everything is based on a credit search so it can do more harm than good.

Amex used to be great when you could get air vouchers now it's AVIOS or something (shit) I don't bother and you still get the stigma of some places not accepting it (yes, still even today)

Amex will normally give you a higher limit than Visa / Mastercard because of that very thing. They want a larger UK marketshare.

As it's your first card just apply for a simple credit building card you should get a min 1200+ limit and just manage it.

You want to start having some "responsible" lending on your credit report anyway you need to buy and pay it off in full each month otherwise any cash back schemes etc are totally pointless.

I'm not a fan of credit cards to be honest. If you can't afford it you don't need it. Simple.


That said you do need them to keep your credit having no credit is as bad as having a shit credit record anyway!

Buy food on it. Put the money you have for food in a monthly instant access saving account sometimes you get a monthly overlap and you can earn a shit % (similar to cash back) and then withdraw the money and pay the card off.

I don't look for cash back anymore buyer protection is all I want. Holidays and so on.

It's a really slippery slope lending money and without a means to pay it back you get in the shit QUICK.

Anyhow.

If you want cash back or those kind of offers shop around I think ASDA was doing Asda credit card if you spent £200+ in a month and paid it off in full via a direct debit within 60 days and linked it to your Asda reward card you got £6 or £60 vouchers or something like that added to your pot.

Which kind of works out better than a cash back scheme and they run monthly offers to tie and collect it in. I do that for the office kitchen / toilet supplies and after 12 months we get a free shop.

Tesco used to do great fuel rewards and club card vouchers I don't think it's the same anymore.

Id shop around and see what you can get and find. Just be careful about borrowing more than you can pay back.

 

[ggmopa]

Credit cards...

You working or can pay it off? if not it's a fast trap as a student to ruin remember takes 6 years to come off your record and everything is based on a credit search so it can do more harm than good.

Amex used to be great when you could get air vouchers now it's AVIOS or something (shit) I don't bother and you still get the stigma of some places not accepting it (yes, still even today)

Amex will normally give you a higher limit than Visa / Mastercard because of that very thing. They want a larger UK marketshare.

As it's your first card just apply for a simple credit building card you should get a min 1200+ limit and just manage it.

You want to start having some "responsible" lending on your credit report anyway you need to buy and pay it off in full each month otherwise any cash back schemes etc are totally pointless.

I'm not a fan of credit cards to be honest. If you can't afford it you don't need it. Simple.


That said you do need them to keep your credit having no credit is as bad as having a shit credit record anyway!

Buy food on it. Put the money you have for food in a monthly instant access saving account sometimes you get a monthly overlap and you can earn a shit % (similar to cash back) and then withdraw the money and pay the card off.

I don't look for cash back anymore buyer protection is all I want. Holidays and so on.

It's a really slippery slope lending money and without a means to pay it back you get in the shit QUICK.

Anyhow.

If you want cash back or those kind of offers shop around I think ASDA was doing Asda credit card if you spent £200+ in a month and paid it off in full via a direct debit within 60 days and linked it to your Asda reward card you got £6 or £60 vouchers or something like that added to your pot.

Which kind of works out better than a cash back scheme and they run monthly offers to tie and collect it in. I do that for the office kitchen / toilet supplies and after 12 months we get a free shop.

Tesco used to do great fuel rewards and club card vouchers I don't think it's the same anymore.

Id shop around and see what you can get and find. Just be careful about borrowing more than you can pay back.

Amazing rwriteup mate. Thanks a lot. And you're spot on, it's essentiall about building a credit score as I 'dont really have one' even though it's on goodish with the bereaus.

My only real question is whether or not your typical credit card has a usage fee for small frequent online transaction in the country of issue. Is that how the system works? That would build up to be more than it might be worth using.

They rejected my application for a cashback card and it got rejected despite having savings (although my savings are mostly tied up in bonds, ISA etc) and an 'okish' income not full time though, so i'm going to try again with a credit builder card instead for the time being. I tried services like loqbox, monese credit builder account but none of them helped to really improve scores substantially enough.

 

[polecat]

You can do like this you spend £100 from that you get some money back if I use Uber get 15% back for it. £15

MacDonald hotels if I spend £150+ get 10% back for it.

If you can find businesses you on it could be useful giving you saving for me not much since most stuff they offer never buy from.

 

[t2van]

Amazing rwriteup mate. Thanks a lot. And you're spot on, it's essentiall about building a credit score as I 'dont really have one' even though it's on goodish with the bereaus.

My conly realy question is whether or not you typical credit card has a usage fee for small frequent online transaction in the country of issue. Is that how the system works? That would build up to be more than it might be worth using.

They rejected my application for a cashback card and it got rejected despite having savings (although my savings are mostly tied up in bonds, ISA etc) and an 'okish' income not full time though, so i'm going to try again with a credit builder card instead for the time being. I tried services like loqbox, monese credit builder account but none of them helped to really improve scores substantially enough.

Try Capital One.

Do the free online check first to see if they will offer you one, if they don't give you a credit builder no one will. Not unless you want a brutal APR but id avoid that totally and go down the road of one saving type cards like lockbox as you mentioned.

No, no fee for purchasing just the APR if you don't pay it off.

If you go abroad and use it or if you buy say dollars online your subject to any additional processing fees as well as the conversion rate AT TIME of purchase.

 

[ggmopa]

Try Capital One.

Do the free online check first to see if they will offer you one, if they don't give you a credit builder no one will. Not unless you want a brutal APR but id avoid that totally and go down the road of one saving type cards like lockbox as you mentioned.

No, no fee for purchasing just the APR if you don't pay it off.

If you go abroad and use it or if you buy say dollars online your subject to any additional processing fees as well as the conversion rate AT TIME of purchase.

I'll give this a go

 

[t2van]

I'll give this a go

Yeah, just remember as well the more you apply the more it will fuck up what little score you have!

So try the soft search first.

Best of luck