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Cashback credit card transactions soar as shoppers struggle with cost-of-living crisis

30 November 2023

Earn while you spend cashback credit cards offer a festive saving solution.

By Matthew Cook,

Reporter, Trustnet

Consumers facing higher inflation leading into the festive period are turning to alternative financial tools to combat the rising cost of living. One getting more attention is cashback credit cards, according to Moneyfactscompare finance expert Rachel Springall.

The number of cashback credit card transactions increased 12% in the third quarter of 2023 compared to the previous three months, hitting almost 12 million. This increase has marked the most significant quarterly growth in cashback credit card transactions since the first quarter of 2020.

Cashback credit cards come with a variety of features and benefits. Some offer flat-rate cashback on all purchases, while others offer bonus cashback categories for certain types of spending, such as groceries, gas, or travel. Some cards offer introductory cashback bonuses for new cardholders.

Springall emphasised the practicality of cashback credit cards for conscientious spenders, noting, “cashback credit cards provide an avenue for planned spending, whether for festive seasons, post-holiday sales, or everyday expenses.”

Some of the top deals on the market currently include the American Express Platinum Cashback Card, which offers 5% cashback for three months (up to £125), then 0.75% to 1.25% depending on spend.

“One provider to offer an additional incentive for shoppers is American Express, as from 1 until 3 December, it will give customers a £5 statement credit when they spend £15 or more at participating small businesses across the UK through its popular Shop Small Offer,” Springall said.

“As consumers will notice, this is a limited period for shoppers to maximise the reward, and they will need to enrol for the offer to take advantage. Credit cards are also a good method to use for spending in general as shoppers are protected under Section 75 of the Consumer Credit Act.”

The Santander World Elite Mastercard offers 0.5% cashback on spends between £1 and £15 up to a total value of £3,000 each month, while the Halifax World Elite Mastercard and Lloyds Bank World Elite Mastercard offer 0.5% cashback on spends up to £15,000 per month, then 1% thereafter.

If a family allocates £500 towards Christmas gifts and £200 on food, utilising a 0.5% cashback credit card, they would accrue £3.50 in cashback rewards. Similarly, a couple putting in £300 for a Christmas gathering and £100 on travel, utilising a 1% cashback card tailored for dining and entertainment, could earn £4 in cashback.

Springall advised: "When comparing cashback credit cards, pay attention to the cashback rates, purchase APRs, and annual fees. You should also consider any special promotions or incentives that are being offered."

Insights from the ONS's Cost of Living Survey underscore the financial challenges a significant portion of the population faces. More than half of surveyed adults reported increased expenses, predominantly attributed to rising food prices and mounting energy bills. A notable 5% admitted to facing food shortages due to financial constraints.

Figures from the Consumer Prices Index (CPI) indicate that sectors such as food and transportation continue to experience substantial inflation rates of 13.4% and 9.2%, respectively, highlighting the need to choose financial solutions wisely.  

Additionally, this time last year, the Bank Of England base rate was at 3%, and it now sits at 5.3%. This increase, coupled with the persistent escalation of living costs, has heightened concerns surrounding the stability of household finances compared to late 2022, particularly for those with variable mortgages and other debts.


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