Earn over £500 a year with a cashback credit card

Consumers funding their monthly expenditure on a cashback credit card and depositing their salary in a high interest current account could earn themselves £549 a year according to moneysupermarket.com.

Cashback cards give customers a monetary bonus every time they spend and are a good way to make their money work a bit harder. For example, spending £2,500 per month with the American Express Platinum Cashback card would earn customers £424.25 per year - enough to cover an annual mobile phone bill.

Kevin Mountford, head of banking at moneysupermarket.com, said: "With rising inflation rates and the recent hike in VAT, times are tough for UK households and consumers need to be a little more creative when it comes to their finances.

"While the decision to borrow must never be taken lightly, a cashback card can be a great way to generate some extra income. However, spending solely on a cashback credit card requires consumers to be disciplined and organised, as anyone failing to pay back the full balance at the end of each month could be hit with a hefty interest payment, negating any cashback benefit. Customers can avoid this potential pitfall by setting up a Direct Debit to pay off the full amount each month.

"However, before applying for any credit product, consumers need to ensure they weigh up their chances of being accepted as approval conditions vary from provider to provider. moneysupermarket.com has a credit profiling tool which displays the card consumers are most likely to be approved for based on their own credit score, meaning they can apply for a card with confidence."

An added bonus is that credit card users also benefit from extra legal protection when making large purchases under Section 75 of the Consumer Credit Act, which states that any purchase made between £100 and £30,000 is doubly protected by the customer's provider.

There is a further benefit for those funding their monthly spending with their flexible friend - their salary, left untouched in their current account will be accruing interest at the same time. For example someone putting £2,500 into the In Credit Account from Santander each month could earn £125 in interest over the course of a year. Added to the £424.25 earned by using the American Express Platinum Cashback card, this ‘double header' of interest and cashback would net the customer £549.25 per year - more than enough cover a families grocery bills for a month.

Kevin Mountford continued: "A little research goes a long way and consumers should ensure they look at their current products and regularly check the market for better alternatives. There are currently some excellent options available for those looking for a current account and the interest accrued, combined with cashback bonuses could represent a real boost for struggling UK households. The beauty of this ‘double header' is that consumers do not need to change their spending habits, just their payment method, and as long as they're on top of their monthly repayments it could amount to some great savings."