Santander’s 123 card was once one of the best deals for cashback the market had ever seen (sadly the card is no longer available to new applicants), but the offer was gradually scaled back until this week, when the card’s cashback was capped at £9 a month, which would only be £6 a month once the monthly fee is accounted for.
The 123 card was by no means alone, but was rather the last of many offers to go after a 2015 regulatory change that saw credit card operators need to swallow transaction costs, which many banks and credit card companies claimed as the reason for quietly removing their credit card cashback and reward offers.
The good news is that there are still a few cards available on the market that offer good value reward and cashback schemes.
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The ‘top 3’ picks for reward and cashback cards
It’s worth remembering there’s no such thing as a ‘best’ credit card, and you should always carefully consider whether a card is right for you. While we think the below offer some great offers, they might not be value for money for you.
So before applying for a reward card, it’s worth thinking about what kind of rewards you’d like for your spending as well as thinking about where you spend, and if you spend enough to make a reward card with a fee worthwhile.
British Airways with American Express
This no-fee card from British Airways and American Express offers one Avios point for every pound spent, as well as some other useful benefits.
You also receive a welcome bonus of 9,000 Avios if you spend £1000 within the first three months of owning the card which will set you well on the way to getting free flights.
If you spend as much as £20,000 in a year you’ll also be entitled to get a ‘companion voucher’. This is a second seat for a friend or family member (on the same flight and cabin) when you book a flight with your reward points.
Your British Airways American Express card also gives you automatic enrollment in the British Airways Executive Club, which can entitle you to benefits like priority check-in and boarding, airport lounge access and fast-track security.
You can enjoy three months of 5% cashback on all purchases (£100 maximum), and if you get the card before 31 January 2017 you can also get three months of 3% cashback on all Amazon.co.uk purchases (£15 maximum).
After this cashback is staggered, if you spend:
- £0 to £5000 you earn 0.5% cashback
- Over £5,001 you earn 1% cashback
This reward card from Tesco is a good card to keep around for everyday spending, with both a low APR and reward scheme.
The card will reward you with on Clubcard point for every £4 you spend in a Tescos, or for every £8 spent elsewhere. Clubcard points count towards ‘vouchers’ Tesco will send you every three months, you can use these in Tesco stores or with their business partners on perks like meals, days out or even holidays.
But what makes this card a useful addition to any wallet is the low APR, which makes this a good value card if you don’t think you can pay your balance in full each month, though it’s worth mentioning you can make purchases for 0% interest for up to 27 months with the right credit card.
Premium and high-end cards – worth the fee?
If you are a big spender or a frequent flier it might be worthwhile considering some of the more premium cards on the market. Whilst these cards come with hefty annual fees running into the hundreds of pounds just to have the card, the rewards can be impressive.
Are cashback and rewards being cutback?
Back in 2015 the EU capped interchange fees (the fees Visa and MasterCard charge retailers for accepting card payment) hoping it would encourage competition and help small businesses, but Visa and MasterCard claim this increased their costs which were be passed onto cardholders either as higher fees or reduced rewards.
In the years since this was introduced we’ve seen several cards scale back or remove their cashback and reward schemes from the market.
Are we living in an age of cheap credit?
It’s likely they will continue to do so until the Bank of England eventually raises the base rate, but with “Trumpflation” already hitting the more sensitive mortgage rates and concerns about the UK’s unsecured debt reaching levels not seen since 2008, the cheap credit boom might not last forever.