The best credit cards for Christmas cashback

If you're planning an expensive festive season, you need to apply now for the best credit cards for cashback on purchases.

Time for a clear-out

I have somehow managed to accumulate nine credit cards over the years, most of which I don’t use. I have a Tesco Card for the bonus points, Amex for the cash rebate of 1.25%, a NatWest card for when the Amex card isn't accepted, and a Nationwide credit card because it used to have no foreign usage charge. The benefits of the Nationwide card are now minimal, and I have five other cards that I no longer use. Time for a rethink – particularly with Christmas shopping on the agenda.

I'm going to close my Nationwide, Opus, Halifax, MBNA, IF and Barclay accounts, as I haven’t used any of them for well over two years. I took them out because they offered 0% deposit transfers, kept them until the interest-free period expired, then paid off the debt. I pay off my credit-card bills in full each month by direct debit, so I no longer need this facility. 

But I do need a card that offers no foreign usage charge because I travel a lot. If I continue to keep the cards I don’t use, it'll hamper any attempt to take out another fee-free foreign usage card. The card companies don’t like you having access to too much credit – even if you don’t use it – in case you suddenly get into difficulties and run up debts you can't repay.

Saga Platinum Visa

Once I've closed the unused accounts I'll apply for a Saga Platinum Visa card, which has no foreign usage fees worldwide and offers an interest charge if you use the credit facility of, typically, 11.9% on purchases or 21.47% on cash withdrawals. You pay 2% for cash withdrawals with a minimum fee of £2, but there's no annual card charge.

It also offers 0% interest on purchases for the first nine months, which could be useful over the Christmas shopping period when money could be tight. There is also nine months of interest-free credit for balance transfers with a 3% fee on the amount transferred, which could be useful if you have debts on other cards – and no annual fee.

For those contemplating expensive Christmas shopping, financial analyst Defaqto has been looking at the reward cards that, if you opt for the cashback, can be worth having. There are 13 credit cards that offer cashback, with the amount depending on how much you use the card.

‘If you are confident that you can always repay the entire outstanding balance on your credit card every month then it makes sense to choose a card that offers rewards,’ says David Black, Defaqto's banking analyst. ‘Although Christmas is an expensive time, the right type of credit card can help you earn while you spend.’ To qualify for the best cards you will need a good credit track record and secure income.

Capital One and Amex

For those wanting the maximum cashback to cut the cost of Christmas spending it's a toss-up between Capital One’s World Mastercard and the Amex Platinum Cashback card. Capital One’s card has a very generous introductory offer of 5% cashback on purchases during the first 99 days up to a maximum rebate of £100. After that the cashback reduces to 0.5% on annual purchases up to £6,000, 1% on spending of £6,000 to £10,000 a year and 1.25% if your total spending exceeds £10,000. There is no annual fee.

Amex offers 2.5% cashback on purchases in the first three months, subject to a maximum of £100 or spending of £4,000. After that the cashback is 1.25% on purchases with an additional 1.25% on the anniversary month of taking out the card if you have spent £10,000 in the previous year. This means a total discount of 2.5% for high spenders – definitely worth having. There is a £25 annual fee.

M&S and Tesco

For those who know they won’t immediately be able to pay off the debts run up over Christmas, the card with the longest 0% introductory period on purchases is the sensible choice. The longest 0% introductory rates on purchases are offered by Marks & Spencer and Tesco – both offer 15 months interest-free. Barclaycard offers 14 months at 0%, while Halifax’s All In One and Virgin Money’s Virgin Purchase credit card both offer 13 months interest-free on spending.

Santander and the AA

If petrol is a major expense, Santander’s 123 Cashback card and the AA’s Rewards Plus card could be a good choice, as Santander offers 3% cashback at petrol stations on purchases up to £300 a month, which means a discount of £9 a month. 

There are other cashback savings on supermarket and department-store spending. The AA offers a cash rebate of 3% up to a maximum annual spend of £2,000, plus 0.5% cashback on all other purchases. There is no fee on the AA card, while Santander charges £24 a year, which cancels out a chunk of the potential £108 saving on petrol.