Santander limits credit card cashback
Loyal Santander 123 Credit Card users will see the amount of cashback they earn capped from today (Wednesday 1 February).
Changes implemented last October meant customers who opened an account after September 2015 were restricted to earning £9 cashback each month.
But now all customers, including the longest standing 123 Credit Card holders, will see their cashback capped. At the same time the standard interest rate will increase from 12.7% (variable) to 15.9% (variable).
The move means account holders can earn up to £3 cashback a month in each of the following categories:
- 1% cashback at major supermarkets
- 2% cashback at major department stores
- 3% cashback at major petrol stations and on National Rail and Transport for London (TfL) spending
Previously customers earned unlimited cashback on supermarkets and department store spends, but cashback was capped at £9 a month on National Rail, TfL and petrol spending. Users will continue to pay a £3 monthly fee to hold the account.
The Santander 123 Credit Card is no longer available to new customers, having been replaced with a range of products targeting overseas travellers, customers looking for a long balance transfer period, and a 0.5% flat rate cashback card.
To see the best cashback and rewards credit cards on the market today visit the Moneywise credit card comparison tool.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.