This Article is About
monthly budget
added benefit
spending money
credit card
Cash Back Card UK – Cash Back Reward And Pitfalls Does It Help With Budgeting?
Join 1000's of Authors at StreetArticles Today!

We all like the idea of receiving some cash back reward when spending money; you could look at the cashback card as a way to receive discounts on purchases you would make anyway, but which cash back card is the best one for you?

With any type of cashback card you will receive a percentage of your spending back on you card's account (or at times via a cheque yearly). You will receive this cashback reward when you spend in shops (online shops as well) that are affiliate with your specific card 's cash back reward scheme.

It is a good idea to check the list of shops partecipating in the cashback card scheme for the specific card you are considering to use, make sure shops you ususally visit are on that list!

Most cashback cards offer up to 5% cash back reward only for the first 3 months (especially cash back 'credit' cards), after the first 3 months it goes down to between 0.5% and 3% depending on what you buy or which shop you buy from. There is some much better cashback card offer available but it is not the norm, more about this later.

To start with, you need to be aware there are three types of cash back cards, cash back credit cards, cash back debit cards and cash back prepay cards. How do they differ from each other and which type is the most useful if you are trying to keep on top of your monthly budget?

Cashback Credit Card: these cash back cards work just like normal credit cards, of course with the added benefit of giving you cash back rewards when you use it to buy things from shops.

(Pitfall Alert!) Just like any other credit card, you must make sure you repay the card in full each month or you will incur interests on outstanding balances. The interest cost you could end up paying on your purchases will render your cash back rewards useless. Cashback rewards range from 0.5% to 5% while interest costs could be around 18% APR.

Do not fall into this trap, if you must use a credit card make sure you can repay it in full every month, maybe via direct debit so you don't need to remember about it. If you must use a credit card and you cannot repay the card in full every month you may be better off with a credit card that offers the lowest interest cost overall, 0% on purchases for the longest initial period; do not base your choice on cashback rewards alone.

Unless you are an expert credit card user that knows how to make the most of the free interest periods, balance transfers deals, etc... and especially if you cannot repay your credit card balance in full every month then a credit card with or without cash back reward is not your best friend when it comes to keeping your expenditures within your monthly budget because you may end up making use of your credit to go over what you can safely afford and end up paying high interest costs on unpaid balances.

Cashback Debit Card: these cash back cards works just like a normal debit card where funds from your card's account are immediately taken to pay for your purchase. Not as many around as for the credit card variety, sometime limited to a maximum cashback reward amount per year.

(Pitfall Alert!) The maximum cashback yearly limit is not such a good thing for you, check these limits if any, if you use your debit card a lot, you may only receive little benefit from a limited/capped cash back reward.

(Pitfall Alert!) Cashback debit cards tend to offer overall lower cash back rewards percentages

The advantage is that you do not need to worry about interest costs because with a debit card you can only spend up to what you have on the current/saving account linked to that specific debit card. If you have an overdraft facility setup on that account be aware, with overdrafts there are overdrafts' costs/interests costs.

For most people a cashback debit card is an easier tool than a cashback credit card to help you stay within your monthly budget. Epsecially if you do not have an overdraft facility you simply won't be able to spend more money than you actually have in your account. You will not be able to buy that cool thing you didn't really need :) but at least you won't be accumulating high interest debts :)

Cashback Prepay Card: a prepay cash back card is the easiest and possibly friendliest of the cash back cards when it comes to keeping on top of your monthly budget. You preload your card with your chosen amount of money and you can only spend up to that amount.

You won't get into debts because you won't be allowed to make purchases of a value higher than the funds you prepaid/left into the card. ( Warning: Do not borrow money to load up your prepay card with cash, that would still count as debts! :) )

Because you top up your cash back cards with your own money, there is not going to be any interest cost.

(Pitfall Alert!) Prepay cash back cards will come with one or more type of fees (e.g. registration fee, monthly fee, transaction charges, top up charges), these fees can go from £0.00 (which is good :) ) to a few £pounds depending on which cashback prepay card you choose, or for top ups it may depend on how you top up your cashback card (online/post office/telephone/etc...)

Choose well and you will benefit from high cash back card rewards, you can get up to 7% cash back from popular shops and brands and up to 19%(or more) with some card on some online shops.

In conclusion the simplest way to enjoy cash back rewards on your everyday shopping and the simplest way to use a cash back card while trying to keep your shopping habits within budget appears to be to choose a solid and well connected cash back prepay card with low fees and high cash back rewards.

Street Talk

No comments present
You May Also Like
Soa: Data Caching to Avoid Performance Pitfalls
Service-Oriented Architecture (SOA) provides an attractive alternative to conventional, monolithic applications. With a shared, multi-tiered infrastructure comprised of enterprise business services, SOA is increasingly seen as a way to improve agility, enhance productivity, reduce costs, and achieve full interoperability. Those benefits are attractive to the many organizations fighting for competitive…
By: Brownz in  Business  >  Change Management   Oct 01, 2012  
  Likes: 0

Watering My Lawn – the Pitfalls Of Over Or Under Watering
When, and how much water do I need to irrigate on my lawn? These are the questions I am going to attempt to answer in this article. The exact amount required by the lawn grass and when, would need a private consultation, and then the answer could only be given…
By: Rob Ainslie in  Home and Family  >  Gardening   Jan 31, 2012  
  Likes: 3

Should I Make My Ex Jealous? - The Pitfalls
There is no easy way to overcome a breakup and completely turn the tables on the process by winning back your ex's heart. There's no guidebook that's guaranteed to win in every scenario. If there were, you would already be well on your way, and you wouldn't need to search…
By: Isabella Rose in  Relationships  >  Reconnecting   Nov 10, 2012  
  Likes: 1

10 Pitfalls Of Any Diet Plans for Weight Loss
Who has not faced this problem: you use a diet plans for weight loss, deny oneself, but those extra pounds have no intention to leave! .. What is the reason? It turns out that there are "pitfalls" which we are unaware. 1. Sweetener. Many people think that artificial sweeteners do…
By: Viktoriya in  Health and Fitness  >  Weight Loss   Dec 31, 2011  
  Likes: 0

Three Pitfalls To Avoid When Writing Your Online Dating Profile
Knowing how to do something in order to accomplish the best result is important. But that isn't enough in itself; it doesn't stop there. It's also extremely important to know what you should NOT do, what mistakes to avoid. One of the best approaches to reach that goal is finding…
By: Grace in  Relationships  >  Dating   Jul 25, 2011  
  Likes: 2

6 Pitfalls to avoid when designing a Group Coaching Programme
You have to be careful in respect of the number of participants you include in any one programme. The reason being is that if you have too many people at one time, there may come a point where they get frustrated if they don’t get the amount of attention they…
By: Christine Marmoy in  Business   Jun 07, 2011  
  Likes: 0

Is cheap web hosting good for your business and what are their pitfalls if any?
In this discussion I want us to be as sincere and down to earth as possible because when you come to the issue of anything cheap there are many connotations to it. What do we really mean by cheap web hosting? Does it mean that there is a type of…
By: Austin Okonji in  Internet and Businesses Online  >  Web Hosting   Jul 20, 2011  
  Likes: 0

Making Your Ex Jealous - Will It Work If You Want Them Back?
Learn exactly how to make your ex jealous so that they will want and desire you again and chase after you to give it another chance. Also learn about the best methods to make your ex jealous and what to avoid. You have probably heard a lot of good and…
By: Charlotte Jane in  Relationships  >  Conflict   May 26, 2012  
  Likes: 1

The Number One Reason Affiliates Fail, Know How To Avoid it
I started knowing about affiliate programs for 4 or 5 years now, I was very excited to start doing it thinking it was a piece of cake and that I was going to achieve millions when I post my ad as if the world was waiting for me to start.…
By: asmaa moussa in  Internet and Businesses Online  >  Affiliate Revenue   Nov 10, 2011  
  Likes: 0

Persional Monthly Budget
budget is a well recorded data or figures showing the amount of money being spent per month , or the monthly expenditure . its very important for aperson to record down what he has spent on dailly , after every month he is able to know how much is his…
By: mpimbye in  Writing and Speaking  >  Creative Writing   May 19, 2011  
  Likes: 0

Patriot Act Bank Supplies
The evolution of terrorism has caused legislators and government officials to ramp up security and create new protocols for handling and containing this problem. In 2001, President George W. Bush signed the USA Patriot Act into law. Believe it or not, this actually stands for : Uniting and Strengthening America…
By: 15STMKTG in  Finance  >  Personal Finance   Mar 22, 2016  
  Likes: 0

Understanding the Differences Between Trade Credit And Cash Credit
When running a business or looking for unsecured business lines of credit, it is important that you know the difference between cash credit and trade credit. At Corporate Cash Credit we offer both options, for two very different reasons. Whether you want trade credit or cash credit, or both the…
By: Cristia in  Finance  >  Personal Finance   Jan 21, 2016  
  Likes: 0

4 Great Ways to Remove Tough Stains From Dry Cleaner Sherman Oaks
After buying some popcorn and hot dogs you and your significant other sit in the front seats of the theater when you notice something dwelling on your shirt- it has a brand new stain on it! Now you won't be able to enjoy the movie, and your hubby has turned…
By: Jim Green2 in  Finance  >  Personal Finance   Sep 30, 2015  
  Likes: 0

Know More About Online Payment Modes And High Risk Merchant Accounts
Shopping is a part of everyone’s lives. It is something that we do inevitably to get through each and every day. But what’s fascinating about shopping is that it is evolving with us, and now, most people shop through the internet. If you have a business online and you are…
By: tisamit1 in  Finance  >  Personal Finance   Sep 14, 2012  
  Likes: 0

What You Should Know About Australian Discretionary Family Trusts
A discretionary family trust, commonly termed as a family trust, can sometimes be a highly effective framework regarding tax purposes as well as investment protection. Traditionally this type of trust seemed to be established by households carring out a family business, but more frequently in the present cultural and also…
By: NickFlynn in  Finance  >  Personal Finance   Aug 27, 2012  
  Likes: 0

Article Views: 2263    Report this Article