’Reward’ credit cards

With a reward credit card, every time you spend on the card you get something back in the form of points, discounts or, in some cases, even flights.

A typical example is the BMI Aqmerican Express credit card. If you spend £250 within 90 days of opening the acount, you will receive 20,000 air miles – which could translate to a return trip for two to a European city of your choice. After that, you receive four-and-a-half destination miles for every £1 spent on flights, and a further one-and-a-half destination miles for every pound pent on other things.

It all sounds a bit faffy, and after a three month interest free period, the card reverts to a fairly typical APR of 16.9%. So, good perks but a fairly average to high interest rate attached.

Kevin Mountford, head of banking at moneysupermarket.com, told thisismoney website: 'Anyone going down the rewards route needs to understand that interest rates on these cards can be quite high, so customers unable to repay their debt in full each month should consider an alternative product, as any interest charged will always negate the value of the rewards, even on the most generous schemes.'

Andrew Hagger of Moneynet.co.uk went further by saying: 'You are never going to earn a life changing amount from rewards or cashback cards, but if you always clear your card statement every month without fail, then it makes sense to get something back in return for your custom.'

As always, it’s your attitude to how you use the card that in the end is the decisive factor.

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