Debit card paying Brits lose out on cashback millions

The majority of Brits (92%) have been affected by increasing living costs, with a third of UK households paying out between £600-£1,200 more than last year on everyday spending, according to research by American Express Platinum Cashback Credit Card.

With most household payments made by debit card the average UK household is missing out on hundreds of pounds of free cashback a year warns American Express.

Tom Allder, Vice President UK Lending, American Express, said: "We're on a quest to get
UK householders to ditch their debit card payments. Each British household is paying out thousands of pounds a year on debit cards for everyday items such as supermarket shopping and petrol. Simply by changing the way they pay for these items, people could be earning themselves hundreds of pounds of free cash."

Escalating household costs:

The American Express research revealed that 89% of UK adults are paying more each month on household costs (such as supermarket shopping, petrol and bills) compared to 12 months ago:

A third of these (33%) said they are paying between £51-£100 a month more now than in 2007 (£612 - £1200 a year)

Almost a quarter of respondents (24%) said they are paying up to £50 more each month (that's up to £600 a year more)

Just under a fifth (19%) revealed they are paying £101-£150 more (an annual increase of between £1212- £1800)

Almost two-thirds of those surveyed (60%) think their financial situation is likely to worsen over the coming 12 months and only 15% believe their personal financial situation will improve according to the American Express study. With household day-to-day expenditure running typically at around £18,000 a year (that's excluding mortgage/rent or childcare costs) and the average annual take home salary at £27,976 there's little room for manoeuvre if costs rise further in the next 12 months.

Supermarket shopping:
When asked about how they are making payments, the study showed that although the use of credit cards is growing the debit card still remains the most frequent payment method for everyday goods and services such as supermarket shopping and petrol by two-fifths of respondents (40%). A fifth (20%) of savvy shoppers are already paying for these items specifically with a credit card to earn cashback and reward points. A further fifth of respondents admitted to using cash (20%) most frequently.

Paying the bills:
Despite the growing use of credit cards for everyday spending, the majority of respondents (91%) most frequently pay bills (such as Council tax, insurances and utilities) from their bank account - via direct debit, debit card, cash or cheque. Only 3% of respondents are paying their household bills using their credit card. According to the American Express survey credit cards are used most frequently to pay for more expensive items such as a new kitchen, bathroom, the main family holiday, or jewellery. However, many people are still paying for these bigger ticket items using debit cards, cheques and cash and are missing out on potential cashback and rewards.

Credit card and cashback bonanza:
In 2007 the total number of debit card purchases reached 4.9 billion compared to credit card purchases at 1.9 billion. Every UK household could be earning £380 free cashback in year one, and over £200 per annum thereafter, by putting their basic annual spending on the market leading cashback card instead of using a debit card. In addition, Cardmembers can apply for fee free Supplementary Cashback Credit Cards for friends or family members to ensure they make the most of cashback earned on everyday spending.

In addition, credit cards provide up to 56 days of interest free credit, by using a debit card householders are missing out on attracting current account interest on their balances. Importantly credit cards also provide the added benefit of extra assurances and peace of mind if a purchase is defective, or a holiday is cancelled, debit cards do not provide this level of protection.

Allder says: "We want to change the way people think about credit cards...they are a great way of earning money on all your spending, particularly in the current economic climate when every penny counts. The majority of household spending can be paid using a credit card...not just supermarket shopping and petrol, but council tax, home and car insurance, utility bills and childcare costs.

American Express is synonymous with cashback, we've been offering it for ten years and we remain the UK's number one Cashback provider. We've seen the number of requests for our Platinum Cashback Credit Card double in the last twelve months as more and more people are catching on to Cashback."

Tips to make your money work harder for you:

Pay using a market leading cashback credit card

Apply for a supplementary Card for your partner or family members to ensure cashback is earned on all household spending

Look for 56 days interest free period

Don't use your debit card to pay for everyday shopping - keep your money in a current account that pays a higher rate of interest

Credit cards provide the added benefit of extra assurances and peace of mind if a purchase is defective, or a holidays is cancelled, debit cards do not provide this protection

The market leading American Express Platinum Cashback Credit Card offers new applicants cashback at 5% for the first three months on up to £4,000 of spending. After this period cashback is calculated at tiered rates:

0.5% for aggregate annual spend amounts up to £3,500
1% for aggregate annual spend amounts from £3,501 to £10,000
1.5% for aggregate annual spend amounts in excess of £10,000

The Card has no annual fee and a typical 18.9% APR variable for purchases. Cashback is paid annually on the Card anniversary date.