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Are premium cashback and reward credit cards worth the annual fee?
Find out when paying for perks is worth it, and 5 free alternatives
Using a reward credit card for your Christmas spending can be a good way to unlock the perks offered by your provider.
Many brands offer 'free' and 'premium' versions of their reward cards, with premium offerings promising enhanced benefits in exchange for an annual fee.
But is it worth paying for the extra perks? We've crunched the numbers to find out what you could earn if you spend £500 or £1,000 a month on five top premium cards, compared to their free alternatives.
Amex Cashback Credit Card – £25 a year
You can get 5% cashback for the first three months (up to £125). After that, you’ll earn between 0.75% and 1.25% cashback, depending on how much you spend each year. The card comes with a £25 annual fee, and cashback is credited annually as a statement credit.
Is there a free alternative?: Yes, the Amex Cashback Everyday Credit Card has no annual fee. It offers 5% cashback for the first five months (up to £125). After this, it offers between 0.5% and 1% cashback, depending on annual spending.
Is the premium card worth it?: Not currently. Our analysis shows that once you account for the annual fee you’d actually earn more cashback with the Everyday card, especially given its current offer of 5% cashback for five months.
| Card | Annual fee | Cashback rate | Annual cashback on £500 monthly spend | Annual cashback on £1,000 monthly spend |
|---|---|---|---|---|
| Amex Cashback Credit Card | £25 | Months 1-3: 5% Months 4-12: 0.75%-1.25% | £109 | £206.25 |
| Amex Cashback Everyday Credit Card | £0 | Months 1-5: 5% Months 6-12: 0.5%-1% | £143 | £182.50 |
Premium cardholders earn 0.75% cashback on spending up to £10,000 and 1.25% cashback on spending over £10,000 within a year. Everyday cardholders earn 0.5% cashback on spending up to £10,000 and 1% cashback on spending over £10,000 within a year.
- Find out more: best cashback and reward credit cards
Amex Preferred Gold Rewards Credit Card – £195 a year
You earn one Amex Membership Reward point per £1 spent. This can be turned into retailer gift cards, air miles or Nectar points. You also get £5 cashback on two Deliveroo orders each month and four complimentary airport lounge visits annually.
Is there a free alternative?: While there isn’t an exact match, the Amex Reward Credit Card is a good fee-free option, earning one point per £1, but the card doesn't come with any additional perks.
Is the premium card worth it?: You can earn significantly more points with the Gold card, especially in the first year when it’s free. However, given the £195 annual fee from year two onwards, switching to the free Amex Reward card may be better if you want to avoid ongoing costs.
| Card | Annual fee | Annual Amex points earned on £500 monthly spend | Annual Amex points earned on £1,000 monthly spend |
|---|---|---|---|
| Amex Preferred Gold Rewards Credit Card | Free for first year. £195 after | 8,250 | 55,000 |
| Amex Reward Credit Card | £0 | 6,000 | 22,000 |
Introductory deal: Gold card customers can earn 38,000 points with a £3,000 spend in three months, plus 2,500 points per £5,000 spent up to 12,500. Amex Reward customers can earn 10,000 points with a £2,000 spend in three months.
- Find out more: best credit card deals November
Barclaycard Avios Plus – £240 a year
You earn 1.5 Avios for every £1 spent, with a monthly fee of £20. Avios points can be redeemed for flights, seat upgrades, and experiences with partners including British Airways. Spending £10,000 in a year qualifies you for a cabin upgrade voucher or 7,000 bonus Avios.
Is there a free alternative?: Yes, Barclaycard also offers a standard Avios card with no monthly fee. This offers one Avios for every £1 spent. However, you’ll need to spend £20,000 annually to earn the upgrade voucher or bonus Avios.
Is the premium card worth it?: Yes, if you're a frequent flyer with a high monthly spend. But the free card could offer better value for most people.
| Card | Annual fee | Annual Avios earned on £500 monthly spend | Annual Avios points earned on £1,000 monthly spend |
|---|---|---|---|
| Barclaycard Avios Plus Credit Card | £240 | 9,000 | 43,000 |
| Barclaycard Avios Credit Card | £0 | 11,000 | 17,000 |
Introductory deal: Avios Plus new customers can earn 25,000 Avios with a £3,000 spend in three months, while standard Avios customers can earn 5,000 Avios with a £1,000 spend in three months.
- Find out more: best air mile credit cards
British Airways American Express Premium Card – £300 a year
British Airways has its own air mile card where you can get 1.5 Avios per £1 spent and a generous 30,000 welcome bonus. If you spend £15,000, you get a free companion voucher meaning you can take an additional flyer for free on the same flight and class.
Is there a free alternative?: Yes, the standard British Airways Amex card has no fee, earning one Avios per £1. You can also earn the companion voucher by spending £15,000 annually, though it’s only redeemable in economy class.
Is the premium card worth it?: For most people, not really. In our scenarios, we didn’t spend enough to qualify for the 30,000 welcome bonus. Additionally, both the free and premium cards now require £15,000 in annual spending to earn the companion voucher, making the free card a better value for many.
| Card | Annual fee | Annual Avios earned on £500 monthly spend | Annual Avios earned on £1,000 monthly spend |
|---|---|---|---|
| British Airways American Express Premium Card | £300 | 9,000 | 18,000 |
| British Airways American Express Credit Card | £0 | 6,000 | 17,000 |
Introductory deal: Premium cardholders can earn 30,000 Avios with a £6,000 spend in the first three months, however we don't hit this spending threshold in our scenarios. Standard customers can earn 5,000 Avios if they spend £2,000 in the first three months.
- Find out more: best credit card providers 2024
Virgin Atlantic Reward+ Credit Card – £160 a year
Virgin Atlantic’s air miles credit card earns 1.5 Virgin Points per £1 spent. If you spend £10,000 in a year, you’ll qualify for a Flying Club reward voucher, redeemable for an upgrade to premium or a companion ticket.
Is there a free version?: Yes, the Virgin Atlantic Reward Credit Card has no annual fee and earns 0.75 points per £1. However, it requires £20,000 annually to qualify for the reward voucher.
Is the premium card worth it?: For high spenders, yes. For lower spenders, the £160 annual fee may not justify the extra points and perks.
| Card | Annual fee | Annual Virgin points earned on £500 monthly spend | Annual Virgin points earned on £1,000 monthly spend |
|---|---|---|---|
| Virgin Atlantic Reward+ Credit Card | £160 | 27,000 | 36,000 |
| Virgin Atlantic Reward Credit Card | £0 | 9,000 | 15,000 |
Introductory deal: Reward+ new customers can earn 18,000 Virgin points with their first purchase made within 90 days. Standard customers can earn a 3,000-point bonus with their first purchase within 90 days.
