Hello everyone! In a recent post, we highlighted that there can be several good reasons to have a credit card, even if we don’t think racking up debt on them is a good thing. Today we’re looking at Rewards Credit Cards as one of the means by which you can get something good from your card.
The great thing about these is that you spend on the card and get something in return for that spending. If you’re paying it off in full each month (as you should with these) that’s absolutely fantastic, as you’re literally getting given some extra for money you’re spending anyhow.
Where I want to be clear about is that these are not for you if you cannot pay these off in full each month, as they tend to attract higher interest payments than other cards.
You also generally need to have a good credit history for these cards as restrictions are tighter – you should always complete a free eligibilty check on the issuers website before applying so as not to dent your credit history if you get rejected.
Today I want to walk you though the pick of the cards!
Extra bonuses on offer
Many of the cards below are American Express, and offer a very significant welcome bonus on signing up. Generally speaking these involve hitting a spending target in the first three months of card ownership, and vary depending on the card you pick.
There are some restrictions, in that you cannot have had an American Express issued card (it’s fine if you’ve had an Amex card from other provider) in the past two years. You can still get the card, just not the signup bonus.
Maximise your signup bonus
Most of the below options are directly issued American Express cards.
The best way to sign up for an American Express card is through their refer a friend/family member scheme, because you’ll get an even larger signup bonus than if you did it direct (plus your friend or family member will get something as well)! The 2 year restriction on receiving a signup bonuses does still apply.
As an example you’ll get an extra 2,000 points on top of the usual signup bonus if signing up for the Gold card.
If you have a family or friend with an American Express card that can do this then you should ask them if you can do it via them.
When you click this you’ll see you’ve been recommended for the Platinum Cashback Card which is what I use – but if you just click “view other cards” you can select the one you’re after and will get the extra referral bonus.
What is the best reward credit card in the UK?
There’s no “outright winner” or clearly most rewarding card – it simply depends what reward you value. A high-spending frequent flier will get more out of some cards than a non-travelling mid-spender. What we’ve done in our guide below is to try and pick apart those distinctions so you can identify what’s right for you.
Our pick of the cards:
All information is correct as of our last update on 19.01.2021. We’ll do our best to keep our information up to date, but details can change all the time so you should double check this yourself.
The Financial Wilderness may also receive a small payout if you make a purchase through a link on this site. It won’t affect the service you receive and we recommend only what we honestly believe to be the best available, not what gives us commission. You can read more about our affiliate policy on our disclaimers page.
Best for flexibility and signup bonus:
American Express Preferred Rewards Gold Credit Card
Representative APR: 56.6% APR Variable
Annual Fee: Free in Year 1, £140 per year thereafter.
Signup Bonus: 20,000 points when spending £3,000 in the first three months of cardmembership;
Earnings Rate: 1 point per £ on regular spending, 2 points per £ on spending with airlines. (1 point is worth about 0.5p)
The Wilderness Verdict:
The American Express Preferred Rewards Gold Card is a great option…..for a year. The initial signup bonus coupled with the fact that you can have the card for free in year one make this a compelling introduction to a reward credit card.
Longer term it’s more debatable, as £140 is a reasonably hefty annual fee.
If you value flexibility in how you spend your rewards, you might want to consider keeping this card longer – it’s pretty unmatched for the number of partners you can transfer your points too, including most major airline rewards schemes and big names like Amazon. The best reward is one you use, so that choice can be powerful.
You’ll also get two free visits to airport lounges as well, which is a nice little extra. These will be basic lounges at airports, rather than the airlines own highly plush ones, but can definitely beat waiting in a terminal!
That breadth comes with a trade off in the fact there are cards which will give you more in terms of return. A point comes back roughly worth 0.5p a mile depending what you spend it on (for the detail – Tim at the excellent Take Me to the Points blog has constructed a table showing the exact value of the major point cash-in options in his post here.) Note, it is possible to improve on this value via one of the more focused airline rewards cards below if you simply want air miles and are happy to commit to a specific carrier.
In conclusion – if you want the variety of rewards choices, it’s a decent option. Otherwise I’d take this card for a year based on the introductory bonuses, then cancel it at the end of that year to avoid the Year 2 charge and if I wanted flexibility, switch the fee-free regular rewards card below.
If you like the flexibility but don’t want annual charges:
American Express Preferred Rewards Card:
Representative APR: 22.2% APR Variable
Annual Fee: Not applicable.
Signup Bonus: 5,000 points when spending £2,000 in the first three months;
Earnings Rate: 1 point per £ on regular spending. (1 point is worth about 0.5p)
The Wilderness Verdict:
Whilst the signup bonus is considerably lower than the gold card above, this card offers a similar ongoing points payout for your spending, excluding that extra bonus for spending with airlines – and no fee.
In conclusion: I think the Gold is better in the first year, but this card is better on an ongoing basis if you just want simply to have a rewarding credit card for a longer period.
The points with this one still work out as approximately worth 0.5p per mile. Again, the Take Me to the Points blog has constructed a table showing the exact value of the major point cash-in options in their post here.
Most rewarding card overall/Best if you fly a lot, like BA and spend more than £10,000 a year:
British Airways American Express Premium Plus Credit Card
Representative APR: 74.7% APR Variable
Annual Fee: £195 a year
Signup Bonus: 25,000 bonus Avios when spending £3,000 in the first three months.
Earnings Rate: 1.5 Avios for every £1 spent, and 3 Avios for every £1 spent with British Airways or BA Holidays.
Additional Rewards: You get a BA Companion Voucher at a £10,000 spend (which allows you to cash in the same Avios for 2 seats on a journey rather than 1)
The Wilderness Verdict:
For starters, £195 is a massive amount to spend on any credit card, even if the rewards with this one are good. I’ve emphasised before that the only good rewards are ones you use – so if you’ll definitely take a flight with Avios and use that companion voucher, this one actually really can pay off and save you money. If you won’t, it’s an expensive bit of plastic.
I just have a note of caution with any form of cards that reward you in points. This is not the same as cash. Those points are subject to the whims of the airline and what you can redeem them for can change at any moment.
Now that’s always a risk, but in the present environment I’d be particularly cautious. The travel industry is hurting, and if I were an airline CEO wanting people to buy seats with cash not Avios, I can see how I might be a little tempted to slash the value what I can get for my Avios. That’s not fact, it’s me theorising – but I think it’s a point worth considering.
In terms of value, a spend of £10,000 is presently the magic number where the potential benefit from the card outweighs the large fee. If you’re spending less than £10,000 or can’t be absolutely sure if using the rewards (or just want a fee-free card) then look below.
The value of an Avios can massively change depending what you spend it on, but 1p per Avios is generally a fair assumption.
In conclusion: The earnings rate is good, and if you’re happy taking your rewards in Avios the return rate is much better than the other rewards cards above.
If you fly a reasonable amount, like BA and spend less than £10,000 a year:
British Airways American Express Credit Card
Representative APR: 22.2% APR Variable
Annual Fee: Not applicable
Signup Bonus: 5,000 bonus Avios when spending £1,000 in the first three months.
Earnings Rate: 1 Avios for every £1 spent
Additional Rewards: You get a BA Companion Voucher at a £20,000 spend (which allows you to cash in the same Avios for 2 seats on a journey rather than 1)
The Wilderness Verdict:
For all except the biggest spenders this is a more sensible card to have. It provides a excellent return rate on Avios for a free card, and you get the benefit of those earnings being more beneficial as you’re focusing them on BA.
All the warnings I mention on the Premium card above regarding being cautious about the value of Avios still apply here!
As above, we think 1p per Avios as present is a fair representation of the value of earnings.
If you fly a lot, like Virgin Atlantic and spend more than £10,000 a year:
Virgin Atlantic Reward+ Credit Card
Representative APR: 63.9% APR Variable
Annual Fee: £160
Signup Bonus: 15,000 Flying Club Bonus Miles on your first spend on the card.
Earnings Rate: 1.5 Virgin Points for every £1 spent on regular spending, 3 points per pound on Virgin Atlantic flights or Virgin Holidays.
Additional Rewards: After a £10,000 spend you can upgrade a round trip booked with miles in economy to premium economy or you can choose to take a companion voucher in any class.
The Wilderness Verdict:
This is the card I had myself up until recently, as travelling solo on Virgin Atlantic routes reasonably frequently made that Premium Economy upgrade for a whole round trip offering quite considerable value to me!
The ongoing earnings rate of the card is also excellent, and actually slightly better than the BA cards in terms of what you get in terms of bang for buck. It’s also a Mastercard rather than an American Express, which offers the added advantage of being accepted everywhere.
There are a few issues with this one though. Firstly, Virgin don’t fly as many places as BA, so you’d want to be sure you’re frequently flying their routes. The expensive £160 annual fee is just not worth it otherwise.
I used to note here that Virgin imposed some annoying cabin restrictions on use of a companion voucher, however as of 22.08.2020 they’ve removed the restrictions and you can use a companion voucher in any cabin – this is quite an upgrade and makes this card considerably more attractive.
In my notes on the American Express BA card above I mention the potential dangers associated with air miles devaluation. I’d express there an element of additional risk with Virgin, where there is some threat to the airlines future which would obviously negate the value of any miles earned. It appears that for now they have secured their immediate future, but you’d be wise to take this into consideration.
Virgin Points rather than Flying Club miles?
FYI: Virgin have now changed their scheme to Virgin Points which lets you spend across the Virgin Group. It somewhat mitigates the risk of Virgin Atlantic going under and making your points worthless, but if you’re signing up for the card it’s probably looking for Flying Club miles so it’s still worth thinking about!
If you fly a lot, like Virgin Atlantic and spend less than £10,000 a year:
Virgin Atlantic Rewards Credit Card
Representative APR: 22.9% APR Variable
Annual Fee: None
Signup Bonus: There is presently no signup or referral bonus on the Virgin Atlantic Rewards Credit Card.
Earnings Rate: 0.75 Virgin Points for every £1 spent on regular spending, 1.5 miles per pound on Virgin Atlantic flights or Virgin Holidays.
Additional Rewards: After a £20,000 spend you can upgrade a round trip booked with miles in economy to premium economy or you can choose a companion voucher.
The Wilderness Verdict: A free version of the above Virgin Card, that provides good miles gathering opportunity (and is also helpfully a Mastercard) but not as beneficial as the above, with the trade off from the fee. If you’re unlikely to hit a £10k spend and or use the upgrade/companion voucher, this is a better choice for you.
There are other reward cards out there, and it’s my intention over time to try and build this into a comprehensive article on the full range of reward card available. If I haven’t included a card in here for now it’s generally because I believe it doesn’t represent as good value for money as the above.
For avoidance of doubt that includes the American Express Platinum Card and the American Express Nectar Credit Card.
The exception to this is cashback credit cards which I think are a superb alternative to a rewards card if you’re simply looking to minimise cost, and you can read my thoughts on the best cashback card options here.
If you think I’ve missed a reward card which offers great value I’d love to hear from you! Please note it in the comments and contact me and I’ll very happily take a look.
There’s lots to consider with these cards, and there’s often no true best option as it depends how you’ll use the card. If you have any further questions, please just leave a comment below!