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Reward and cashback credit cards: have all the best deals gone?

Deals to earn rewards such as air miles and cashback are drying up.

Reward and cashback credit cards are a great way for the financially savvy to make money on everyday spending – but the deals are becoming scarce.

The number of reward and cashback credit cards on the market has tumbled since 2015, following the introduction of EU rules which put a cap on card-processing fees used to fund these perks.

Which? takes a look at how these deals have changed, and whether there are any reward or cashback credit cards left that are worth going for.


Why are credit card perks being cut?

The cap on interchange fees, which was introduced in December 2015, is the main cause of so many reward and cashback deals being changed or pulled.

An interchange fee is the amount of money card issuers such as Visa and Mastercard can charge retailers for taking debit or credit card payments.

Since 9 December 2015, interchange fees have been capped at 0.2% for debit card transactions and 0.3% for credit card. Before that, the average interchange fee was around 0.85%.

As cashback was partly funded from the interchange charge, credit card providers have reduced their cashback rates or cut them altogether.

Credit card perks that have been axed

Capital One was the first to move, cutting its 0.5% cashback offer in June 2015 in anticipation of the interchange fee cap.

A number of providers followed suit over subsequent years, with Asda Money becoming the most recent provider to curb its cashback offering.

On 13 April this year, the supermarket bank cut cashback from 0.5% to 0.2% – a 60% drop.

But it’s not just cashback credit cards that have got worse. Other perks, including supermarket points and air miles, have been withdrawn or diluted.

Tesco Bank was one of the first to crumble when it halved the rewards it offered credit card holders in September 2015, ahead of the interchange fee cap. Clubcard points available to cardholders spending outside of Tesco changed from one for every £4 spent to one for every £8 spent.

More recently, Lloyds Bank-owned MBNA scrapped its Rewards Credit Card and Credit Card with Cashback in September 2017, and shut down its Virgin Atlantic and American Airlines credit card deals to new customers in November last year.

Are there any good reward credit cards left?

Despite the cull of reward and cashback credit cards, there are still some left on the market worth going for.

Cashback cards are best suited to people who are able to do their everyday spending on credit, and then clear their balance in full each month.

If you’re likely to struggle to pay off your bill every month, cashback may not be for you.

If you do want to pursue cashback rewards, you should act quickly, as there are no guarantees these deals will be around for long.

You can compare deals over on Which? Money Compare, but we’ve picked out some of the best below.

Best cashback credit cards

When it comes to cashback, the key things to check are the rate at which you’ll earn points, and whether there are any caps on how much you can earn.

The highest rate available right now is on the American Express Platinum Cashback Everyday Credit Card, which offers 5% cashback.

But you can only earn this rate in your first three months with the card, and the cashback is capped at £100.

After your first three months, you’ll earn 1% uncapped cashback on all purchases if you spend more than £5,000, or 0.5% if you spend less than this amount. The card is fee-free and comes with a representative APR of 22.9%.

You can check out all the best cashback credit card deals left on the market on Which? Money Compare.

Best credit cards for air miles

If you want to use your everyday spending to earn air miles, there are a few options depending on the scheme you want to use.

For the popular Avios scheme, the British Airways American Express Credit Card offers 5,000 bonus Avios when you spend at least £1,000 within three months, and allows you to collect one Avios point for each £1 spent.

It’s fee-free and has a 22.9% representative APR.

 You can check out the best air-mile credit card deals left on the market on Which? Money Compare.

Best credit card for points

When looking for the best credit cards for earning points, you should consider which scheme you’d like to join, such as Nectar or Clubcard.

However, some offer points that you can transfer to a scheme of your choosing.

The American Express Preferred Rewards Gold Card offers 20,000 Membership Reward points when you spend £2,000 in your first three months of card membership.

You can convert these into Nectar points worth £100, or into a range of other schemes and rewards.

The card comes with an annual fee of £140 that is waived in the first year. The representative APR is 57.6% APR, so you’ll need to make sure you pay back what you spend each month to avoid interest racking up and cancelling out the benefit of the rewards.

Weigh up the best credit cards for points using Which? Money Compare.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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