Recent weeks may have been full of depressing financial news but American Express (Amex) has bought some cheer by doubling the cashback paid on its Platinum Cashback card to 5%.

The move propels the Amex card into top position as the most generous cashback credit card on the market. Here, we take a closer look at the new offer, to see if this could be the right card for you.

What's the deal?

American Express used to pay 5% on its Platinum Cashback card, but reduced the rate to 2.5% last summer. It has now reintroduced the 5% cashback rate for the first three months, with the maximum you can earn at this rate capped at £100. That means you would need to spend £2,000 on the card to achieve the £100 limit, as opposed to the previous £4,000.

Once you have reached the £100 cap, you can continue to earn cashback on further spending, at the standard ongoing cashback rate of 1.25%. All spending after the first three months will then earn cashback at this standard rate.

Cardholders also have the opportunity to receive a loyalty bonus of 2.5% during their anniversary month every year, with no upper limit to the amount of cashback that can be earned.

All cashback is paid by being added to your credit card balance.

According to Amex, the average family could earn as much as £253 a year on their spending using the card. This is based on the average £14,300 spent on goods and services over a year that could be put on a credit card.

Any catches?

The card has an annual fee of £25. If you don't pay off what you owe in full each month, you will be charged interest at 14% variable. Once the fee is factored in, the card has a representative annual percentage rate (APR) of 18.5% (variable).

If you are not able to clear your balance every month, then this card may not be right for you, as the cost of the interest on your debts is likely to outweigh the benefit of any cashback you earn.

As with all market-leading credit card deals, you will need an excellent credit rating to apply. You must also have a household income of £20,000, although this has been reduced from £30,000, which makes the card accessible to more people.

Verdict

This card is currently the market-leading cashback card and therefore represents a great deal for anyone who tends to make most of their purchases using a credit card and who is able to clear their balance in full each month.

The Capital One World Mastercard offers an equally generous 5% cashback for the first three months, capped at £100. However, once you reach the £100 limit you don't earn any further cashback during the introductory period, whereas with the Amex card you earn 1.25% on any subsequent spending.

The Capital One card also offers less generous cashback rates once the introductory period is up, paying 0.5% cashback if you spend up to £6,000, rising to 1% if you spend between £6,000 and £9,999. Anyone spending over £10,000 will earn 1.25% on anything they spend above that threshold. Although this card does not have an annual fee, it does have a steep representative APR of 19.9% (variable).

Another option that may be worth considering is the Santander 123 card. This pays 3% cashback on fuel spending, capped at a £300 spend per month, 2% cashback on department store spending and 1% cashback on supermarket spending. But you won't earn cashback on any spending outside supermarkets, department stores and petrol stations.

Like the Amex card, it has an annual fee which will cost you £24.Once this is factored in, the card's representative APR is 22.8% (variable).

Top tip

Whichever cashback card you go for, set up a direct debit to be sure you pay off your balance in full each month and to save you the hassle of having to remember This is crucial if you are going for a cashback or credit card, as you don't want interest charges to wipe out all the cashback you have received.

Please note: Any rates or deals mentioned in this article were available at the time of writing.