6 Steps to Earning Serious Cashback
Everyone wants to make their money go further. Fortunately there are some quite simple things you can do straight away to achieve this. Increasingly it’s possible to secure some decent cashback and rewards for pretty much all of your normal day to day spending – maybe to use for treats and travel! Here are six quick steps, which will hopefully help you to make small changes to earn more back on your spending.
1. Expect to earn something back on almost everything you spend.
This is the first,and most critical, step on this list. First you need to understand that you can easily earn cashback or rewards (from at least one source, often more) on almost everything you spend, and then you need to make this become your basic expectation when spending money. If you do this, and use the other steps here, realistically you can get anything from 1-10% more from your money each month.
The primary sources of cashback you can get on pretty much all expenditure (what I’ll call, ‘transactional cashback’ here) are a) your current account/debit card and b) your credit cards. This is cashback financial institutions offer as an incentive for using their payment method – usually because they earn money from the retailer. You can not only get this cashback on retail transactions, but also on household bills paid by direct debit.
If you expect to get cashback on almost all transactions, then you’ll need to ensure you identify suitable ‘Rewards’ accounts. In an ideal world, to maximise your returns, you’ll have three primary payment sources. Typically an American Express card will offer the best credit card rewards, but as this won’t be accepted everywhere it’s useful to have a rewards Visa or Mastercard too. In addition you’ll then have a rewards current account. A fundamental point here is that reward credit cards are only worthwhile if you pay your statement in full each month. These cards don’t tend to carry the most competitive interest rates and the credit will likely cost more than you’ve gained in cashback if you don’t pay in full.
What you can ‘earn’ from credit cards tends to take two forms – actual cashback (i.e. money straight onto your statement) and reward points which can then be converted into travel, experiences, gift vouchers, statement credits, etc. Some points (e.g. Nectar) have a consistent value, others (e.g. Amex) have a variable rate which is dependent on how you redeem them.
There a number of different options available and sites like Money Saving Expert provide good reward card comparisons (MSE – Reward Cards), but to illustrate, my favourite 3 current examples (all of which I’ve used) are:
NatWest Rewards Current Account – 2% back on household bills with eligible providers (gas, electric, council tax, water, TV, phones), variable % cashback on spending with partner retailers plus £125 for switching. £2 monthly fee applies.
American Express Preferred Rewards Gold Credit Card 1 point (worth about 1%) for every £1 spent, plus 20,000 points bonus (see step 2) + travel perks. Free in year 1, £140 thereafter (can be cancelled at any time). Click here for referral link and further details.
M&S Bank MasterCard – 2 points per £1 spent (worth 1%) in year 1, plus £25 in vouchers/points. 1 point per £1 spent (0.5%) from year 2 onwards. No fee.
The above make decent starting points for earning transactional cashback on the majority of monthly expenditure.
Getting monthly cashback on mortgage payments can be a bit more complicated as, even where this is an option, this will require the mortgage to be held with the same bank as the current account and this may not necessarily mean it will be the best deal. This is different to the transactional cashback you get on utility bills for example, where you can often get the cashback and still have the freedom to choose the best price from all available suppliers. Also, I find that transactional cashback on insurance premiums can usually be achieved via card payments, rather than direct debit.
2. Target credit card sign up bonuses
Whilst the first step is the most important in securing a consistent percentage of expenditure in cashback, the second offers the best shorter term opportunity to significantly inflate this percentage.
Reward cards typically offer a welcome bonus, usually for hitting a spend target over a period of about 3 months. This bonus can inflate the equivalent cashback percentage by anything from 5-11% of expenditure on that card, up to the bonus spend amount and only during this period. This is where the incentive for, what is known as, ‘churning’ credit cards is – the principle being that by moving from card to card you can ensure you’re pretty much always in a bonus period and hitting these higher rewards. Credit card providers, of course, are working on the assumption that most people will see the bonus as an incentive and then keep using the card in the longer term. Caution should also be applied in relation to the potential impact of making multiple consecutive credit card applications on your credit rating.
Bonus points or cashback are usually paid as a lump sum once you hit a target. I’ve previously highlighted the American Express Preferred Rewards Gold Credit Card (see here), which awards 20,000 bonus points, worth up to £200, for spending £2,000 in 3 months (i.e. potentially an additional 10% on that spend). I’ve also highlighted the American Express Nectar card (see here), which awards 20,000 bonus Nectar points, worth £100, after £2,000 spend in 3 months (i.e. an additional 5%). Both of these bonuses are in addition to points rewarded per £ spent, which in both cases can be worth about 1% of everything spent on the card.
The best option for you will depend on your lifestyle, spending and what rewards you’re most interested in, but the American Express Preferred Rewards Gold card is a good starting card for rewards, especially if you want to use rewards for travel. The bonus for this can be increased to 22,000 points if you use my referral link: (click here).
3. Check Quidco or TopCashback every time you spend online
This is likely the most obvious step on the list. Most people are familiar with sites like Quidco and TopCashback, where specific retailers offer a cashback as an incentive for sign ups/purchases, etc. To secure these you simply need to register, and then start any purchase you make online by clicking through the cashback App or website. This cashback is usually less immediate than the transactional cashback, often taking a number of weeks to be verified and paid. The rates can vary significantly, depending on the retailer, and only some retailers offer this. Sometimes rates are a percentage of the purchase value, other times they are a flat cash reward.
Quidco also offers the opportunity to ‘trade up’ your cashback balance for a voucher with a selection of retailers. For example you can increase your cashback by a further 1% for an Amazon voucher, 5% for Costa or as high as 10-15% for some dining or gift experience retailers.
4. Check your cards/accounts for specific retailer options
Many cards and accounts offer promotions where you can secure additional cashback for using a specific retailer. If your account has these, normally they can be found via the offers tab on your bank or card app.
The majority of cashback offers are applied as a statement credit or cashback into your account, but sometimes promotions give extra points for certain activity. These promotions are quite often targeted, so will vary from customer to customer, and may be linked to your expenditure activity.
The most important thing to know about this, is that these offers are usually ‘opt in’, so you have to find and select them in order to benefit from them. This is to ensure they are actively providing you with an incentive to use that retailer.
5. Get and use loyalty cards/membership for the retailers you use most regularly.
Lots of major brands either have their own loyalty scheme, or are linked to a partner loyalty scheme. An obvious example being something like Nectar, where you can earn at least 1 point per £ spent across brands including Sainsbury’s, Argos, eBay.
For those brands you use most, ensuring you have (and use) loyalty membership is important. Normally these schemes are free, and returns can be anything from 0.5-10% depending on the brand, your volume of use and the offers available at any one time.
Loyalty schemes apply for just about everything from coffee shops to grocery shopping to hotels and flights. Rewards are normally paid in points, which can then be used for free credit with that brand, although for some of the brands these rewards are often able to be used across a numbers of partners. Again this applies with Nectar, Tesco Clubcard and also some travel linked schemes like Avios. However, it’s always worth checking options for getting best value from points – especially for travel where this can fluctuate quite significantly. For hotels in particular I find that returns can be generous, especially if you are a frequent customer. For example I have Hilton Gold status and during their recent double points promotion, with the increased earning rate for gold, I have been getting at least 28 points per £ spent, which is equivalent to about 10% back against future stays paid in points.
6. Stack all of the above!
Here’s the great bit… in most cases, if you’re organised, you can stack some, or occasionally all, of the above for some serious money back on your expenditure.
So, to use a real and active current example, say you spend £100 on an online grocery shop with Morrisons via an American Express Gold Preferred Rewards card for £100. Step 1: You’ll get 100 points (worth about £1) as transactional cashback from American Express. Step 2: If you’re then in a bonus period this is also 1/20th of your spend target (so worth another £10 if you hit it, because that’s 1/20th of the 20,000 points reward). Step 3: In addition, Morrisons are offering £4.60 cashback via Quidco for new online customers. Step 4: They also have a targeted American Express offer for 6% cashback on every purchase over £50 (that’s another £6). Step 5: Finally, if you have a Morrisons More loyalty card, points are worth about 0.5% of spend, so a final 50p.
If you organise your accounts so that you’ve registered for all of this, in this example that’s £22.10 or 22.1% on that £100 spend. Establish a good enough understanding to replicate that kind of approach elsewhere and you can see how this could quickly result in significant amounts of cashback to use for more exciting things!
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For an American Express referral, for any card, use our link (click here) for an additional bonus.
N.B. Disclaimer: This is an amateur, personal blog. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances.