Would you switch banks for cashback on your debit card?

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Most banks these days have current accounts which offer cashback on bills and other spending. But how do cashback debit cards work, and is it worth switching banks to get your hands on one?
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Most major UK banks these days offer cashback debit cards giving you the chance to earn some money on your day-to-day spending and bills.

As more people choose to switch current accounts more regularly, banks have to work harder to keep their customers, and these perks are some of the sweeteners many banks use to tempt you to join.

But what exactly is cashback, how does it work, and will you earn enough to make switching a good idea? We explain everything you need to know.

How do cashback debit cards work?

Whenever you use your debit card, details of your transaction are logged by your bank, including how much you’ve spent, which shop you were in and when you spent the money.

If you have a cashback current account, your provider uses this information to reward you by paying money into your account. Typically, you’ll get a percentage of your money spent back, depending on which shop or website you were using.

Some banks will only offer cashback at specific partner stores, and others will vary the percentage depending on which retailer you choose. Most have a maximum amount you can earn each month.

Plenty of providers have also extended their cashback offers to other current account transactions, including direct debits and standing orders, meaning you can earn money back on things like your utility bills and council tax.

Often you will be charged a monthly fee for a cashback account, so you need to do your sums and see if what you’re likely to earn is more than you’ll have to pay for the account in the first place. But some accounts offer this service free, so it’s worth shopping around carefully.

Who offers cashback with their current accounts?

At the time of writing, the following banks offer cashback incentives with some of their current accounts:

  • Barclays

  • Chase

  • The Co-operative Bank

  • Danske Bank

  • Halifax

  • Lloyds 

  • NatWest

  • Royal Bank of Scotland

  • Santander

  • TSB

All the cashback schemes vary considerably, with some offering higher rates at a select number of shops and others giving you the option to shop at hundreds of stores but paying a lower rate in return.

Which shops will earn you cashback when using your debit card?

Which shops trigger cashback rewards will depend on your bank. Some will offer a blanket return on all your shopping regardless of where you spend, while others have different cashback and incentives depending on the retailer.

Well-known high-street stores and supermarkets are often included, as are many restaurants and online retailers. Some accounts are even more attractive because they offer cashback on council tax, broadband and utility bills.

The easiest way to check where you can cash in is by looking at the terms and conditions of your current account by visiting your bank’s website.

How much cashback can you get?

Once again, this depends on where you bank and where you shop.

For instance, the Santander 123 account gives you cashback on your household bills paid using your direct debits. You get 3% on water bills and 2% on energy.

You also get 1% back on your council tax, mobile, phone, broadband and paid-for TV, as well as on Santander mortgages. 

Meanwhile, Chase offers 1% on purchases for the first 12 months and 5% interest on small amounts in credit.

And Halifax offers £5 a month if you either pay in £1,500 per month for a year or keep £5,000 constantly in your account.

Lloyds Bank offers up to 15% cashback through its Everyday Offers, but only on specific brands which change regularly. You need to log into your account to activate each offer individually.

*figures correct at the time of update

Is it worth switching your current account?

While current account cashback is a nice bonus and worth taking advantage of if you can, it should not be the only reason you move your bank account.

There are plenty of other more important factors that could save you more cash if you’re on the hunt for the best current account.

If you need an overdraft, you will be better off finding an account that gives you an interest-free offer for small amounts. Equally, if you hold a large credit balance in your current account, you should consider accounts that pay you interest. Switching bonuses can be worth hundreds of pounds, which is another factor to consider.

Try comparing accounts for yourself using our current account comparison table.

New bank accounts are offered all the time, so compare all of the best options to make sure you get the right one for you.