New top cashback credit card - for some of you!

Amex has changed the terms and conditions of its cashback credit card. Find out what this means for you and why it's no longer the best cashback card for everyone...

Whenever we write about cashback credit cards, I always imagine those of you who've heard it all before sitting there, eyes glazed, as we repeat that same old message of how cashback cards are the best thing since sliced bread, how you can make a mint and blah, blah, blah.

This article is more of the same - right?

Wrong. This article is going to tell you something new.

Because this week, the American Express Platinum Cashback card, which has been the market-leader for some time, changed some of its terms and conditions for both new and existing customers - and unfortunately, many cardholders will find they're worse off because of these changes.

To make life easier for you, I've whipped out my fine toothed comb to find out what's really going on.

Here's quick a summary of what's changing:

As you can see, the way these changes affect you depends on whether you're a new or existing customer:

Cashback

Firstly, as the tables shows, Amex has shaken up its tiered rates of cashback.

As a new Amex customer, you'll still earn 5% cashback during the first three months of use, (up to a maximum of £100 cashback). Beyond this, things get a little more complicated.

After the first three months, you'll earn 0.5% on the first £3,500 you spend, 1% cashback on amounts from £3,501 to £7,500, then 1.25% from £7,501 upwards.

Under the new terms, if you spend less than £625 a month (i.e up to £7,500 a year), you'll be no better or worse off than before.

Spend between £625 to just over £1,041 a month (i.e. from £7,500 to a whopping £12,500 a year) and the new terms will work in your favour.

If you usually spend more than £12,500 a year on your card, then the card becomes less competitive than before - but I'm guessing these people are in the minority.

The key point is, existing customers are not affected by these cashback changes - your current cashback rates, as shown in the table above, still apply.

Minimum spend

Another important change by Amex sees a hefty increase in the minimum amount you'll have to spend each year to earn any cashback at all.

New customers must spend at least £3,000 a year to qualify for cashback (previously £2,400). That's an average spend of £250 a month.

It's even worse for existing customers. To qualify for payment, you'll now have to earn at least £25 cashback, or spend £4,250 a year (roughly £355 a month).

That's £1,250 more than the minimum requirement for new customers, and a kick in the teeth to all loyal Amex followers.

There is a bit of breathing space. As an existing customer, you won't see these changes kick in until after your next card anniversary.

So if you normally get cashback on the 31st December each year, you won't have to meet the minimum requirements until 31st December 2010.

A new dawn

If you're new to cashback, I would still recommend getting the Amex Platinum cashback, because of the introductory offer where you earn 5% cashback in the first three months. If you plan your purchases carefully before you take out the card, it can pay dividends on your everyday shopping.

But it seems Amex is looking for a certain type of clientele for its Platinum cashback card, and you'll have to be a high earner if you want to carry one in your wallet.

Amex now requires you to earn £30,000 a year to qualify, which prices many people out of this cashback bonanza.

If all these changes have put you off applying for Amex, there is a better solution.

The Egg Money MasterCard

Egg recently re-launched the Egg Money MasterCard, the all-singing, all dancing credit card that offers a handsome 1% cashback on purchases.

Not only is it more widely accepted than Amex, but it also comes packed with a range of new benefits, including purchase protection, extended warranty for a year, and a special Egg Rewards discount programme.

But there is a catch.

Egg has introduced a fee of £1 per month to all new customers. This means you'll need to spend at least £1,200 a year in order to break even on fees.

But if you're a low to medium spender, Egg Money may still prove better value than the Amex Platinum - even when you throw in the £12 annual fee.

Here's how your spending could add up:

*For months outside the introductrory 5% cashback period.

The new minimum spending rules introduced by Amex means that Egg is better in nearly all the examples, except when you spend over £1,000 a month.

However, these calculations do not take into account the 5% bonus rate earned by Amex customers during the first three months.

Still, unless you are a big spender or are in your first year of cashback with Amex, perhaps it's time to ditch that platinum card for Egg.

The best of the rest

Of course, Egg and Amex are not the only players in the cashback market, and there are other avenues you can explore.

For example, Bank of Ireland's Moneyback Standard and Gold credit cards pay 0.5% cashback on purchases, and give you 51 days interest free credit.

There is no annual fee, but you must earn at least £15,000 in order to qualify for the Gold card.

Ethical bank Smile also offers cashback on its credit card, with no annual fee. Sign up and you'll earn 0.25% cashback, although you'll get just 46 days interest free credit (Egg gives you 50 days interest free, and Amex 56 days.)

As an existing Smile customer, you'll also enjoy a lower standard rate of 16.9% APR, instead of the 20.9% APR offered to non-customers.

But remember, if you're a cashback fan, all this talk of APRs shouldn't matter. If you own a cashback card, always pay off your balance in full each month. If you don't, the interest rate you'll pay will far outweigh any cashback you'll earn.

Happy shopping!

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