Cashback is a financial reward for spending money – typically a percentage of the amount paid. This money is refunded back to you by your credit or debit card provider, hence the term cashback (even though you won't get physical cash). There are also many cashback sites that offer money back for online purchases, but for the purposes of this piece, we're generally referring to reward bank accounts. Learn more about these websites by reading our Top cashback sites guide.
How much you can earn from cashback depends on factors such as the cashback rate and the amount spent. Reward cards generally have cashback rates ranging from 0.25% to 1%, so, say you spent £100 on a card with a 1% rate, you'd get £1 back. That said, some cards offer attractive introductory rates of up to 5% for a limited period.
Any cashback you earn is typically paid out monthly or annually, and there are no rules against having multiple reward cards. That said, each application can impact your credit score. Other common conditions of cashback spending include:
Minimum spending amounts to be eligible for rewards, usually over a month or a year.
Maximum cashback you can earn each month or year.
Restricted spend categories – for instance, cashback on household bills or supermarket spend only.
Tiered cashback rates for different spending categories or amount spent – for example, 0.75% for the first £10,000 spent in a year and 1.25% thereafter.
Do bear in mind that you'll be charged interest for failing to clear the outstanding balance on a reward credit card, something that could wipe out any gains made from cashback. Similarly, many providers charge a flat fee to simply use a reward card, which will also eat into your earnings.