12:48 28 January 2013
The January sales present a perfect opportunity to hit the high street - and as we approach the second half of the month, numbers on price tags are set to fall further still.
But as well as benefitting from the deepest discounts of the year, why not get paid for it as well by putting the cost of your shopping on a cashback credit card?
Cashback credit cards simply repay you a given percentage of the amount you spend on the card, wherever you choose to shop.
So, as long as you clear your credit card balance every month religiously, they could act as a primary weapon for attacking the January sales.
The choice of cashback deals is growing too. Just before Christmas, there were 22 cashback credit cards on the market according to independent research, a number that has doubled since October 2010.
So what cards are out there and what do they offer? Here's our pick of the bunch:
Barclaycard Cashback Card
Currently, the market leading card in the cashback camp is the Barclaycard Cashback Card. It offers 6% cashback on your top five purchases for the first three months - up to a maximum of £120 (which would require £2,000 of spending).
After that you'll earn 2% cashback on the five things you buy the most and 0.5% cashback on all other spend. In addition there's a 'thank you' bonus every year, which means you will earn 4% on your top five purchases during the month that you took out the card.
Cashback is paid to you annually - but you will have to fork out an annual fee of £24 so factor that into your returns.
American Express Platinum Cashback Credit Card
The American Express Platinum Cashback Credit Card is another one to watch. Cardholders can enjoy 5% cashback (up to a cap of £125) in the first three months, and a standard rate of 1.25% thereafter.
You will also receive double cashback of 2.5% every year during your anniversary month of taking the card - providing you've spent more than £10,000 on the card in the last 12 months.
Good news is that the standard 1.25% cashback on this card does not come with a spending cap, which could suit bigger spenders both in January and beyond. The card comes with an annual £25 fee though, and you must have a household income of at least £20,000 a year to qualify.
If you fail to repay your balance every month, you will be hit with a representative APR (which includes the annual fee) of 18.5% (variable).
American Express Platinum Cashback Everyday Card
If you want to avoid the annual fee with Amex, you could opt for its Platinum Cashback Everyday Card instead. It comes with the same 5% cashback for the first three months (but up to a lower cap of £100). You will then earn up to 1.25% cashback thereafter which is tiered according to the amount you spend - though this will need to be at least £3,000 a year.
While this card has the bonus of no annual fee, if you fail to pay off the balance, the representative APR is even higher than its cousin mentioned above at 19.9% (variable). And again, you will need an annual income of at least £20,000 to qualify.
Santander 123 Credit Card
The Santander 123 Credit Card could also be a great addition to your wallet - even if you don't hit the shops that much. As implied by its name, its offers a tiered rate of cashback.
This starts with 3% cashback on the cost of tickets for National Rail and Transport for London, as well as any purchase on fuel (up to a combined £300 cap); 2% cashback at department stores - which is where you could be handsomely rewarded in the sales - and 1% cashback on all supermarket spend.
Unlike most other cashback cards that reward cardholders at the end of every year, the 123 credit card pays out monthly meaning less long to wait for your returns. There is a £24 annual fee to pay which pushes the representative APR up to 22.8% (variable).
If you are planning on taking out a cashback credit card, it's crucial that you pay the balance off in full every month.
As we have mentioned, these cards - just like the vast majority of other credit cards - come with very high interest rates which would by far outweigh the benefits of any cashback. Setting up a direct debit to clear your balance every month is a good idea.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We're free, independent and compare all UK credit cards, as well as offering exclusive deals you can't get anywhere else. Contact: MoneySupermarket.com at Moneysupermarket House, St David's Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2013.
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