Cashback, Reward and Charity Cards

If you pay off your credit card in full every month, you might want to consider choosing a card that rewards you in some way for being so reliable. Even if you don't, you might benefit from a card that gives something back - either to you or someone else.

Here are some examples:

• Cashback credit cards
• Reward credit cards
• Charity credit cards

Which of these suits you best is down to your circumstances and your interests. We've included an overview of each type below to help you understand the strengths and weaknesses of each kind of card.

Cashback Credit Cards

Cashback credit cards do exactly what their name suggests - for every pound you spend, you get a certain percentage credited back to your account in cash.

This is usually somewhere between 0.1% and 1%, but can be more sometimes. Some cards will credit your cashback to you monthly; others will only do it once a year.

Cashback cards reward people who spend a lot on their cards and pay their bills in full every month. They don't usually have the lowest interest rates, so you must make sure you pay your bill in full each month - even one month's interest is likely to be more than your whole year's cashback.

In principle, cashback cards are great - after all, it really is free money.

Reward Cards

Instead of cashback, some credit cards offer reward schemes - rather like store loyalty cards. For each pound you spend, you get a number of points which can be used for certain purposes, depending on the reward scheme.

Reward cards can be great if the rewards available are actually useful to you! If you don't spend a lot on your credit card it can sometimes be hard to build up enough points to actually use, which can be frustrating.

One of the downsides of reward cards is that it can be very hard to work out how much your reward points are actually worth. In addition, if you don't pay off your bill every month, you could find that the interest you are paying cancels out the benefit of the reward schemes. It could be cheaper to find a card with no reward scheme but a lower interest rate.

Charity Credit Cards

Many of the credit cards available today are charity cards. What this means is that for every purchase you make, a certain percentage of what you spend gets donated to the charity named on the card.

In addition, the charity may get a donation for each new cardholder it signs up.

This is obviously a good thing for the charities concerned, but it doesn't mean that you are always getting a better deal. Interest rates on charity cards are not always that low and it pays to check just how much your favourite charity is actually receiving from your spend.

You could always consider finding the credit card with the lowest interest rate possible then donating some of the money you save to your preferred charity!

Don't Forget the Basics

Whatever type of credit card you choose, don't be dazzled by the cashback, reward or charity scheme and forget to check out the interest rates and fees for that card.

Reward and charity cards are often just used as marketing tools by credit card companies and don't always offer the best overall packages.