Nationwide building society is the latest company to withdraw the cashback deal on its credit card; Halifax, Bank of Scotland, Mint, Sainsbury’s Bank and Royal Bank of Scotland (RBS) have done the same in the past 12 months.
And it is not just cashback — Barclaycard ditched the Nectar reward scheme last year and RBS stopped offering Air Miles.
Nick White at Uswitch.com, a price comparison service, said: “These perks were originally designed by card providers to entice people to apply for their credit cards, and to keep cardholders by rewarding them for their loyalty. But they have realised that this is a costly exercise.”
However, there is still a good choice of reward cards available, for the time being at least.
American Express’s Platinum card pays 0.5% cashback on the first £3,000 you spend on the card, 1% on the next £3,500 and 2% above that. The standard rate of interest is 8.9%.
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The Morgan Stanley standard cashback card will give 2% cashback on anything you spend on the card until May 1, then 1%. Its standard interest rate is 15.9%.
The Egg Money card gives 1% cashback with a guarantee that that will not fall until 2007 at the earliest.
It is also possible to earn up to 20% cashback if you use your card with certain retailers. Do so at Trueprint, Buyagift.co.uk or 0800flowers.com and you get 20%. At Virgin Wine, you get 10% back and if you buy something from Apple or Currys.co.uk, you get 5% cashback. The typical rate of interest is 6.9%.
The benefits of cashback can soon add up. If you spent £15,000 on an American Express Platinum card over 12 months, you would collect £209.97 cashback.
You don’t have to go for cash rewards. If you have a favourite shop or are a frequent flyer, you might prefer a different type of loyalty scheme.
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With the Marks & Spencer & More credit card, for the first six months cardholders earn two points for every £1 spent in M&S, and one point for every £1 spent elsewhere. After the introductory period, you get one point for every £1 spent in M&S, and one point for every £2 spent elsewhere. You then receive £1 of M&S vouchers for every 100 points. The interest rate on borrowing through the card is 15.9%.
John Lewis and Waitrose offer a similar card — one point for every £1 spent in either store, and one point for every £2 spent elsewhere. You receive a £5 voucher for every 500 points earned. The interest rate on this card is 14%, although no interest is charged on purchases or balance transfers for the first three months.
Regular travellers may prefer Morgan Stanley’s Buy and Fly card. You earn one Buy and Fly point for every £10 spent. Points can be redeemed against flights and holidays, so 11,000 points would get you a flight to Cape Town. There is six months interest-free on purchase and balance transfers. Then the interest rate is 15.9%.
Richard Mason at Moneysupermarket.com, a comparison website, said: “If a customer pays off the balance each month there is still a good choice of reward cards. However, other people need to consider whether cashback or any other reward is better than clearing their debt as quickly as possible.”
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