There’s no such thing as free money: or is there? But then there are rewards for moving your current account, spending on a credit card or a shop reward scheme. Surely they must be worth doing?
Let’s take cashback and reward credit cards. According to experts Moneyfacts, shoppers using these schemes “will be disappointed to find that they are now receiving very little for their troubles. They may therefore have to work a bit harder to find the best available deals”. Moneyfacts says that the change to card transaction fees in 2015 has meant that rewards on cards have been cut back. You’ll remember these fees: often you used to have to pay a surcharge, typically of 2%, if you paid by credit card but this no longer happens.
Nowadays the most shoppers get when they use their cashback credit card tends to be 50p per £100 spend. Some cards have good introductory deals – American Express gives 5% for three months (to a maximum of £100) on its Platinum Cashback Everyday card but this then goes down to 0.5-1% and the purchase APR is a high 23%. Santander All in One pays 0.5% but there’s a monthly fee of £3.
Reward cards (which pay points rather than cash per spend) are also less generous. Moneyfacts says the Debenhams and House of Fraser credit cards both pay three points per £1 spent in their stores but only one point per £2 elsewhere which means a spend of £1,000 would get you 500 points worth a £5 voucher. Basically, unless you spend a lot of money in one particular shop, use their reward credit card to pay for all your shopping there and then (this bit is crucial) pay your bill off in full each month then these cards may not be worth the bother. I’ve got a John Lewis Partnership card (it sends vouchers every few months based on the amount I spend) but I use it less these days as I tend to forget about money I’ve spent on it until I get the bill – which can be a nasty surprise.
The other big example of free money is when current account providers pay you to transfer to them – some even pay you if your friend moves too. Undoubtedly, this can make you money: have a look at this blog from our pal Faith for more details. You can get £100 for moving to First Direct, for example – or £125 if you click through from Money Saving Expert. But there are rules to comply with – you have to pay a minimum amount in. Call me lazy but I can’t be bothered: but all power to you if you can be organised enough to get this ‘free’ money.
See our guide to credit cards here