Santander cuts cashback on popular 123 credit card – so where can you now find the best cashback deals?
From February 1st, existing Santander 123 credit card customers will earn less cashback
IN a blow to Santander 123 credit card customers, there will now be a cap on the amount of cashback card-holders can earn.
From February 1, customers will be able to earn a maximum of just £9 a month in cashback.
It comes a year after the bank hiked the 123 card fees, from £2 a month to £3.
The cashback changes were announced in November, but come into play next Wednesday.
The card will still offer 1 per cent cashback on supermarkets, 2 per cent cashback on department store spending, and 3 per cent cashback on travel - but the maximum that can be earned in cashback will be £3 per category, or £9 across all three categories, each month.
Previously the credit card had no cap on the amount of cashback which could be earned on spending in supermarkets or department stores.
Now the cashback will only be available on supermarket and department store spending of up to £300 and £150 respectively per month.
Three per cent cashback will still be available on spending on travel, on spending of up to a maximum of £100 per month, down from £300 a month.
The interest rate for purchases made on the credit card will also increase from February 1st, from 12.7 per cent to 15.9 per cent.
The Spanish bank said the changes were being made because of EU regulation and increased costs in the banking industry, "which have a direct impact on the benefits we can offer on our products."
The 123 credit card is no longer available to new customers, after it was replaced last year with a new credit card, the All in One, which offers a flat cashback rate of 0.5 per cent on all spending – but there's no maximum cap on what you'll earn.
Like the 123 card, it has a £36 annual fee.
Tashema Jackson, money expert at comparison site uSwitch.com, said: “Santander’s move to cap the amount customers can earn on their cashback spending is the second blow in 12 months for loyal 123 cardholders who were just last year hit with a hike in monthly fees.
"Yet, this change is perhaps not unexpected and follows a long line of credit card providers that have slashed their customer rewards recently, including American Express and Marks & Spencer.
The best reward credit cards
IF you want to use a cashback credit card, these are the best alternatives:
- Tesco Bank Clubcard credit card. NO FEE. Earn 1 Clubcard point for every £4 spent in Tesco and 1 point for every £8 spent elsewhere
- British Airways American Express credit card. NO FEE. Earn 1 Avios for every £1 you spend, earn 9,000 bonus Avios when you spend £1,000 in your first three months
- American Express Platinum cashback credit card. NO FEE. Get 5 per cent cashback up to £100 cashback for your first 3 months, plus earn 3 per cent cashback up to £15 on all purchases from Amazon in your first 3 months. After three months earn 0.5 per cent cashback on spends up to £5,000
Remember, these cards are only beneficial if you remeber to pay off your balance each month. If you don't then any bonus you earn will be wiped away by interest charges.
Ms Jackson added: "When it comes to credit card providers, loyalty doesn’t always pay. If you’re a Santander 123 customer the maximum you can now earn in cashback is £6 per month, after the monthly fee is deducted.
"To earn this £6, you will need to spend £300 on food shopping, £150 at department stores and £100 on travel each month.
“If you’re unhappy with the change to your credit card, it’s worth shopping around to see if there’s a credit card deal which better meets your needs."
Santander 123 current account customers have not been left off lightly by the bank either.
Last year, customers saw their account fees increase from £2 a month to £5, or £24 a year to £60.
The interest rate on the current account was also cut from 3 per cent to 1.5 per cent on balances up to £20,000.
As a result of the changes, the lender saw only 483,000 customers switch to its account in 2016 compared to around one million the year before.
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