Cashback & Rewards: The Ultimate Guide
In the UK, every penny counts. Whether you’re working towards saving for a home, paying off debt, or simply managing household expenses, small financial wins can add up over time. Cashback and rewards schemes offer a practical way to get more value out of your everyday spending—essentially giving you a little extra back on purchases you were going to make anyway.
But with so many options on the market, from cashback credit cards to supermarket loyalty programmes, understanding how to get started and pick the right options can be overwhelming. This guide will walk you through the essentials of cashback and rewards in the UK, providing actionable steps, practical tips, and examples to help you make the most of your money.
What Are Cashback & Rewards?
Before diving in, let’s clarify these two terms commonly used in UK personal finance.
Cashback: This is straightforward—you receive a percentage of your spending back as cash or credit. For example, if you spend £100 and earn 1% cashback, you get £1 back.
Rewards: These can include points, vouchers, air miles, or other non-cash incentives offered by retailers, banks, or brands for your loyalty or spending.
Both can play a valuable role in improving your finances—if used wisely.
The Main Types of Cashback & Rewards in the UK
Let’s break down the most popular options:
1. Cashback Credit Cards
These credit cards give you back a percentage of your purchases. It’s one of the easiest ways to earn cashback on regular spending.
Top features:
Cashback rates vary (often 0.25% to 1.5%), sometimes tiered or capped.
Some cards offer a welcome bonus.
You must pay off your balance in full each month to avoid costly interest that outweighs the rewards.
Popular UK options:
American Express Platinum Cashback Everyday Card: 0.5-1% cashback, no annual fee.
Barclaycard Rewards Visa: 0.25% cashback, no annual fee, great for use abroad.
Tip: Use a comparison site like MoneySavingExpert to find the latest market-leading cards.
2. Current Account Rewards
Some UK bank accounts pay cashback or rewards monthly in exchange for meeting certain criteria (such as depositing a minimum amount and setting up direct debits).
Examples:
Santander 123 Lite Account: Earn up to 3% cashback on household bills.
NatWest Reward Account: Earn £4/month for paying in £1,250+ and setting up direct debits.
Chase Current Account: 1% cashback on eligible card purchases for the first 12 months.
Tip: Weigh the benefits against any monthly account fees.
3. Retail & Supermarket Loyalty Schemes
Most supermarkets and major retailers offer reward schemes that provide points per pound spent, discounts, or exclusive offers.
Popular options:
Tesco Clubcard: Earn 1 point per £1 (in-store/online). Points can be boosted with Clubcard partners.
Nectar Card (used by Sainsbury’s, Argos, eBay): 1 point per £1 at Sainsbury’s. Points redeemable for groceries or with partners.
Boots Advantage Card: 3 points per £1 spent.
Tip: Download the retailer’s app to maximise your points and access personalised offers. Add the virtual card to your ApplePay (or equivalent) to quickly access them during checkout.
4. Cashback & Voucher Apps
There are apps and websites dedicated to helping you get cashback on online shopping, utilities, or even groceries.
Well-known UK cashback sites:
How it works: Click through their website/app before making a purchase at an affiliated retailer. Cashback is paid into your account when the purchase is tracked and confirmed.
Tip: Install browser extensions from TopCashback or Quidco to be alerted automatically when cashback is available.
Another Tip: Sharing your refer-a-friend link can earn you some affiliate income - a good side hustle to start if you want to earn some extra cash.
Step-by-Step Guide: How to Start Earning Cashback & Rewards
Step 1: Understand Your Spending
Before signing up for anything, review your regular spending. Where do you shop most? Do you spend more on groceries, fuel, online shopping, or travel? This will help you choose the most rewarding schemes for you.
Example: If you spend £400/month at Sainsbury’s, joining the Nectar scheme could be much more beneficial than a Tesco-focused strategy.
Step 2: Choose the Right Programmes
Not all cashback or reward schemes are right for everyone. Here’s how to decide:
Cashback credit card: Good for those who pay off their balance monthly and want to earn on varied spending.
Current account rewards: Ideal if you meet the account requirements (regular income, direct debits).
Retailer loyalty cards: Essential if you spend regularly at specific shops.
Cashback sites: Best for online shoppers or switching services like broadband or insurance.
Tip: Don’t sign up for too many schemes at once—focus where you’ll get the most back.
Step 3: Sign Up and Set Up
Now, open accounts or register for cards/programmes. Make sure to:
Use your real name and details so points and cashback track correctly.
Download relevant apps and link your cards/accounts.
Set calendar reminders for any account expiry or to check for new offers.
Step 4: Always Use Your Card, Account, or App
To earn rewards, you need to remember to use the right card or shop through the right link/app every time.
Pay with your cashback credit card for all purchases (but pay off every month).
Scan your supermarket loyalty card every shop.
Start online purchases via a cashback site.
Tip: Set your chosen cashback card as your default payment in digital wallets and online accounts.
Step 6: Redeem and Track Your Rewards
Some rewards expire, and most require you to manually claim or redeem them.
Cashback cards usually credit your account once a year, or let you request a payout.
Loyalty points may need to be converted into vouchers (Tesco Clubcard, Nectar).
Cashback sites often have a withdrawal threshold.
Tip: Regularly log into your accounts to check balances, redeem points, or transfer cashback.
Maximising Your Cashback & Rewards
Pay off your credit card in full every month to avoid interest charges wiping out your gains.
Watch for bonus offers—many schemes run seasonal boosts, double points, or introductory offers.
Stay organised—set calendar reminders for expiry dates or special offers.
Refer friends—some schemes pay both you and your friend a bonus for referrals.
Don’t overspend just for rewards—stick to your usual budget.
Frequently Asked Questions
Will cashback or rewards affect my credit score?
Applying for a new credit card will usually have a small (temporary) impact on your credit score, but earning rewards doesn’t affect it if you manage your account properly.
Is the cashback I earn taxable?
For individuals, cashback and rewards are typically not taxable as they’re considered a discount on your purchases, not income. For more details, check the HMRC guidance.
Are payback schemes worth it if I only spend a small amount?
The returns may be modest, but over the year, even small amounts add up—especially if you combine multiple schemes effectively.
Conclusion: Make Cashback & Rewards Work for You
Used wisely, cashback and rewards can build up to hundreds of extra pounds a year, simply from your everyday spending. The keys to success: understand your spending, choose the right schemes, pay off credit cards in full, and stay organised.
Start today—pick the cashback card, current account, or loyalty scheme that suits your lifestyle, and watch those little extras add up. The smartest step towards UK personal finance success isn’t always about big changes—it’s about making the most of what you already do.
