My Credit Card Gives Me Free Money

by Donna Ferguson on 01 October 2008  |  13 comments
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You'll smile with every purchase you make on this market-leading cashback card.

I'll let you in on a little secret. I hate spending money.

And so does my other half. (To the extent that he has a mobile phone so rubbish, it actually doesn't ring anymore.)

So when we had to fork out hundreds of pounds of our savings on a large purchase earlier this month, there was only one thing eased our pain: the American Express Platinum cashback card.

For penny-pinching bargain-hunters like us, this card is a dream come true. It offers you 5% cashback on all purchases you make within the first three months of applying for the card, up to £200. After that, the rate of cashback is tiered as follows:

Effectively, this means that, the more you spend, the more you will get back.

So you can at least take comfort in the fact that, with every purchase you make, some of your hard-earned cash goes straight back into your wallet.

Perfect for all that Christmas shopping looming on the horizon...

What's the catch?

Mathematically-minded Fools will have noted that, in order to achieve the maximum benefit of the 5% cashback, you'd need to spend a whopping £4,000 in the first three months.

This will net you £200, but after those three months are up, the rate drops so dramatically you will earn just 5p cashback for every £10 you spend (unless you spend more £290 a month).

On the plus side, there is no maximum limit on the cashback you can receive - so if you typically spend £1,000+ a month on your credit card, then you'll do well with this card.

Just bear in mind that not everywhere takes American Express. This is because Amex charges retailers a higher commisison than other credit card providers, so while most chain stores accept it, few independent shops and restaurants do.

It is also important to note that the APR on this card is a mind-boggling 18.9%. So if you cannot afford to pay off your balance in full every month, this is not the card for you. What you spend will cost you a lot more than the cashback you receive.

Effectively, a cashback card should be used like a debit card - to make purchases you can afford to pay for with cash. If you need to make purchases on credit, use a 0% interest on purchases card instead (or even better, save up the cash and then pay for it using the cashback card!).

More than just cashback

So those are the downsides to this card. But I still think it's a brilliant card.

Why? Because there's more to this card than just cashback.

In my opinion, this card offers some pretty fantastic benefits to its users.

For example, it covers almost everything you buy against accidental damage and theft for 90 days from purchase. (As someone who had their handbag stolen a month after buying brand new glasses, I really like this feature.)

Finally, I like the fact that you can add a supplementary card to your account. This means my other half and I can each have a Platinum card in his name and spend at the same time, making it much more likely we will manage to spend £4,000 over three months. Then, in three months time, we plan to apply for a new card in my name and hopefully get the 5% rate all over again.

So, in total, we hope to get £400 cashback in the next six months, making the American Express Platinum cashback card a very Foolish choice indeed.

I would add a note of caution however - if you apply for the card and then give someone a supplementary card on your account, you are 100% responsible for any debts on the supplementary card. So make sure you can either trust the other card holder(s) to pay you back the money they spend in your name.... or be prepared to foot the bill for their spending.

There's no doubt it's not a card that will suit everyone. But for me and my other half, it's perfect. If only I could get him to use it to buy a new phone...

Apply for the American Express Platinum cashback card today or compare cashback cardsat Fool.co.uk