Compare Rewards Credit Cards

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Last updated on 02 March 2023.

What is a rewards credit card?

A rewards credit card is a credit card that lets you earn perks such as cashback, air miles or rewards points when you spend. These rewards can vary between cards and providers.

Like standard credit cards, rewards credit cards allow you to borrow money. You apply in the same way as usual and, if approved, will have a credit limit to stick to, and repayments to make. You should try to pay the account off in full each month, or at least always make the minimum repayment.

Paying back just the minimum amount can cost you more in total to clear the balance on the card due to the interest charged. It will likely also result in a longer time being needed to clear the debt. Failure to pay back the minimum amount could result in additional charges and harm your credit score.

The difference between a standard card and a rewards credit card is that a rewards card could give you extra benefits for spending – but only if you use it sensibly.

Is a rewards credit card worth it?

A rewards credit card could be worth it if you can benefit from the perks offered while maintaining your usual spending.

You shouldn’t have to drastically change your spending habits just to earn the rewards promised by a particular credit card. If you would have to do this to get a certain reward, the card probably isn’t right for you.

What is more, some rewards credit cards have an annual fee. If this fee is more than you would expect to earn in rewards, it might not be worth taking out the card. In this case, you may be better off looking for a credit card with no annual fee, or at least one with a lower interest rate than a rewards card could offer.

How to get the most out of credit card rewards

Using a rewards credit card for your day-to-day spending could mean you earn points or cashback from ordinary purchases.

For example, putting your weekly food shop on your rewards credit card, then paying it off in full each month with money held in your current account, could allow you to earn rewards without increasing your normal expenditure or changing your shopping habits.

If you have a regular income, it’s worth setting up a direct debit to pay off your card in full each month. That way, you can gain the benefit without racking up interest charges which could cost more than the value of any rewards earned.

Whether you pay off your bill by direct debit or transfer the money yourself, you should aim to pay your account off in full every month, or make at least the minimum monthly payment. It means you’ll avoid additional charges and the risk of late or missed payments that could affect your credit score.

How do rewards credit cards work?

You use a rewards credit card in the same way as a standard credit card. When you make a purchase, the credit card company provides the money and then expects you to pay it back at a later date, potentially with interest.

The amount you will pay back depends on when you repay the money, your credit card’s interest rate, and any additional charges. If you only make the minimum monthly payment, you will pay more than if you paid the borrowed amount off in full each month.

When you spend, you also earn rewards. Rewards are often calculated as a percentage of your purchase. You can receive this as points, air miles, vouchers or cashback, depending on the type of card you have.

» MORE: How does a credit card work?

What types of rewards credit cards can I get?

There are several types of rewards credit cards available, including:

  • cashback credit cards
  • points credit cards
  • air miles credit cards
  • store credit cards

Cashback credit cards

Cashback credit cards allow you to earn cashback when you shop.

Some providers may offer the same level of cashback on all purchases. Others offer a variable rate depending on the type of purchase you make. For example, you may earn more cashback in a supermarket than in other retailers.

Certain transactions may be exempt from cashback, such as gambling, buying foreign currency, or cash withdrawals.

Cashback will be paid to you monthly or annually, and can either be paid to you directly or taken off the outstanding balance on your credit card. You should check the details of your credit card to understand exactly how you will receive your cashback.

» COMPARE: Cashback credit cards

Points credit cards

Some credit cards allow you to earn points on your purchases. These may be loyalty points with a specific store, or more general points that can be redeemed for goods, gift cards or cash.

Alternatively, you may be able to use the points to pay, either in part or in full, for a future purchase on your card.

Air miles credit cards

If you fly frequently, an air miles credit card might appeal to you. These cards work on a similar basis to points credit cards – you earn points which can be used to pay for flights operated by airlines such as British Airways and Virgin Atlantic.

Store credit cards

Some supermarkets and high street stores offer credit cards with perks for shopping with them in-store or online. You may be able to earn loyalty points or vouchers to use on your shopping when you sign up or spend on your credit card.

» MORE: Guide to rewards credit cards

What are the pros and cons of rewards credit cards?

You should consider the pros and cons of a rewards credit card before deciding whether to apply for one.

Advantages of rewards credit cards

  • You may be able to earn rewards for your day-to-day spending.
  • If you’re a frequent flyer, earning air miles may help you save on the cost of flights.
  • If you regularly shop at the same store, a store credit card may reward your loyalty with points or vouchers to use on your shopping.
  • As with other credit cards, purchases you make on the card between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act.

Drawbacks of rewards credit cards

  • Enticing rewards offers may encourage you to spend more than usual or buy things you wouldn’t normally – you shouldn't spend more than you can afford to try to earn rewards.
  • If you spend more than you can afford with the card, you could end up struggling with debt.
  • Any card fees could outweigh the rewards you earn.
  • Rewards credit cards can come with high interest rates – so if you don’t pay off in full each month, the interest could be more than the rewards earned.

How to choose the best rewards credit card for me

If you’re looking for a rewards credit card, there are a few factors you should bear in mind to find the best card for your needs.

You may want to ask yourself questions, such as:

  • Can you get rewards for your normal spending? You shouldn’t have to change your spending habits to claim a reward, as you may be encouraged to spend beyond your means.
  • Does the card have an annual fee? If so, check whether the rewards you would earn would be worth more than the fee.
  • What is the interest rate of the card? You should aim to pay off your balance in full each month to avoid paying interest, but it’s worth knowing the interest rate on the card to see what you would have to pay if paying in full wasn’t possible.

If you’re ready to look for a rewards credit card, you can check your eligibility above.

If you want to know more about rewards credit cards first, you can check out our FAQs below.

Credit Card Rewards FAQs

How many rewards credit cards can I have?

There isn’t a set limit on the number of credit cards you can have.

You may have several credit cards for different purposes. For example, you may use a store credit card to earn points on your everyday shopping, plus a separate credit card for other purchases so you can earn air miles to put towards your next flight.

However, having many credit cards can make it difficult to keep track of your repayments, potentially making you more likely to miss one. Having multiple sources of credit could also encourage you to spend more than you can afford, increasing your risk of getting into debt.

Bear in mind that applying for a credit card will involve a hard credit check, so multiple applications within a short period will likely affect your credit score.

Can I get a rewards credit card if I have bad credit?

You may find it more difficult to get a rewards credit card if you have a poor credit score or no credit history.

If you have bad credit but you’re looking to take out a credit card, you may want to consider a credit builder credit card first. These cards can help you improve your credit score or build up a credit history if you don’t have one currently.

Building your credit score may improve your chances of being approved for a range of credit cards in the future.

» COMPARE: Credit cards for bad credit

How can I apply for a rewards credit card?

If you want to apply for a rewards credit card, the first step is to find one that suits your circumstances.

Providers may offer an eligibility check before you actually apply. This is a soft credit check so it does not show up on your credit report, but it should give you an indication of whether you are likely to be accepted for your chosen card.

Some banks may require you to have another account with them before you can apply for one of their credit cards, so you should check if this applies to the card you’re looking at.

You can usually apply for a credit card online. You could hear back within minutes and, if approved, your new credit card could be sent to you within a few days.

» MORE: 6 steps to apply for a credit card

How can I redeem my rewards?

How you redeem your rewards will depend on the type of reward you are claiming.

Cashback is usually automatic, and will be paid into your credit card account either monthly or annually depending on the terms of the card. This means cashback can be used to pay off some of your balance, though it may not count toward your minimum monthly payment.

If you are building up rewards points with your credit card company, you can usually view your balance using its dedicated app. You’ll also need the app to pay with your points, donate their value to charity or convert them into cash or gift cards, depending on which redemption options your bank offers.

If you have an air miles credit card, your points should be added automatically to your linked airline account. You should be able to see your available point balance by logging into this account.

Store vouchers may be sent out throughout the year. If your credit card offers extra loyalty points at a specific store, these will be periodically transferred to your store loyalty card. You should check the terms of your card for more specific details.

Do rewards credit cards have competitive interest rates?

Interest rates can vary between rewards credit cards. It is a good idea to shop around to compare interest rates and credit limits offered by different providers.

You should also bear in mind that factors such as your credit score could also affect the interest rate and credit limit you are offered.

Other types of credit card may not offer rewards but could have lower interest rates or a longer interest-free period. It is worth comparing a range of different credit cards to find one most suited to your circumstances.

» COMPARE: 0% interest purchase credit cards

What are premium credit cards?

Also known as black credit cards, premium credit cards are exclusive credit cards that offer rewards such as access to airport lounges, travel insurance and concierge services. Often, these rewards cards have a hefty annual fee.

Can I transfer my balance to a rewards credit card?

It is possible to transfer your existing credit card balance to a rewards credit card. You will usually have to pay a fee to do so.

You will usually only earn rewards on new purchases you make, so if you transfer a balance over you’re unlikely to earn any additional points for doing so.

You may consider transferring your balance over to a rewards credit card if you want to minimise the number of credit cards you have. Some rewards cards may offer an introductory 0% interest rate on balance transfers. But you may face a higher interest rate later on.

If you're looking to transfer your existing credit card debt to a new card, you may want to consider a 0% balance transfer credit card instead. These may offer longer interest-free periods than rewards credit cards.

» COMPARE: 0% balance transfer credit cards

What are cashback credit cards?

Cashback credit cards may allow you to earn cashback when you make a purchase. Usually, cashback is calculated as a percentage of each transaction you make.

Cashback is paid to you either annually or monthly. It will appear on your credit card statement and can be deducted from the overall balance on your card or paid to you in cash.

Some cards will only offer cashback on certain types of purchases, while others offer cashback on every purchase you make. You may find that the level of cashback varies by retailer or type of purchase.

» MORE: What are cashback credit cards?

What are air miles credit cards?

Air miles credit cards let you earn points that you can put towards the cost of flights with certain airlines. Airlines such as British Airways and Virgin Atlantic accept air miles points as part or full payment.

Usually, the points you collect using an air miles credit card can only be used with certain operators. If you tend to fly with an airline that doesn’t accept points as payment, then this type of card may not offer the best reward for you.

Do I get Section 75 protection with a rewards credit card?

Yes, purchases made with a rewards credit card may be protected under Section 75 of the Consumer Credit Act 1974.

If you make a purchase worth over £100 up to £30,000 on a credit card, it may be protected under Section 75 if:

  • the goods or services you bought are faulty
  • you do not receive the goods or services you paid for
  • the products you receive are not what you were told they would be

You should address a claim to your credit card provider within six years of the purchase to claim money back under Section 75.

Do rewards credit cards come with any fees?

Some rewards credit cards come with annual fees.

You should consider whether the rewards you may earn are likely to be worth more than the fees charged. If it looks like you’ll pay out more than you’ll get back, then a rewards credit card might not be the right choice for you.

For example, let’s imagine your rewards credit card costs £100 a year and offers 2% cashback on every purchase. You would have to spend at least £5,000 a year on your credit card to earn back the cost of the annual fee in cashback. If you’re unlikely to spend that much on your card, then the fee may outweigh the reward. Another deal may be better suited to your spending habits.

Rewards credit cards may also come with additional fees for actions such as transfers and cash withdrawals. Paying late, missing a payment or exceeding your credit limit may also mean you incur a fee.

» MORE: Credit card fees explained

What do I need to look out for with rewards cards?

As with any credit card, you need to look out for the annual percentage rate (APR). The APR demonstrates how much you can expect to pay for borrowing a set amount, including any interest and additional charges.

Bear in mind that the representative APR shown when you view a credit card does not include fees for late payments or exceeding your credit limit. It is also only guaranteed to 51% of applicants, so you could be offered a worse deal with a higher interest rate.

You should also look at the rate at which you can earn rewards. There may be an introductory offer that changes after a set time, or you may only achieve the best cashback rate if you spend a certain amount on your card. You should be wary of promotions and only spend what you can afford to pay back.

How can I make the most of a rewards credit card in the UK?

To make the most of a rewards credit card, you may want to look for one that fits in with your usual shopping habits.

For example, if you fly regularly then it may be worth getting an air miles credit card so you can earn points to put towards flights. It could save you money in the long run, though you should make sure you can pay off your balance in full each month. Otherwise, the money you save on your flights could be outweighed by the interest you have to pay back.

Or if you buy a lot at a certain store, using one of their credit cards may get you more loyalty points that you can put towards paying for the weekly shop.

It is possible to use a rewards credit card to save money long-term if you use your rewards points to pay for things you would have bought anyway. However, it is important to stick to the terms of the card and pay off your balance in full each month to see any real benefit from the rewards on offer. If you don’t do this, you may end up paying back more in interest than you earn in rewards.

Why should I compare rewards credit cards with NerdWallet UK?

NerdWallet, in partnership with Freedom Finance, allows you to check your eligibility and compare rewards credit cards from a range of providers.

You can check your eligibility before you apply, so you can see which rewards credit cards you’re likely to be accepted for without affecting your credit score. This reduces the chances of applying for a card and having your application declined.

Once you have a good idea of what credit cards you qualify for, you can compare their features and their rewards to work out which card offers the best deal for your circumstances.

Money Advice Service - The government's Money Advice Service website provides concise, unbiased information on choosing and using credit cards as well as handy tools such as credit card calculators.

The UK Cards Association - The British trade association for card payment companies has an extensive range of guides on their website covering all the types of payment cards available to UK consumers including debt, credit and prepaid cards

Financial Fraud Action (FFA) UK - The Financial Fraud Action website features important advice on using payment cards safely and securely as well as information on the latest scams.

Financial Ombudsman Service - If you've already made a complaint to your card provider and have not had your issue resolved satisfactorily then the next step is to take up your complaint with the Financial Ombudsman.