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28 Feb 2019

Nationwide scraps Simply Rewards cashback scheme: what are the alternatives?

The scheme will end for all customers on 1 April

Nationwide has scrapped its Simply Rewards cashback incentives, meaning customers will no longer earn money back on their credit and debit card spending.

The building society has become the latest high street bank to move away from cashback following new EU payment regulations.

Which? examines why Simply Rewards is being ditched, what will happen to existing members and alternative cashback schemes.

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Why is Simply Rewards ending?

Simply Rewards was accessed via a separate website, which allowed credit and debit card members to opt into offers at selected retailers.

When they shopped at those retailers, the cashback was then paid back to their card within a couple of days.

From 1 April, Nationwide's 400,000 members will no longer be able to access Simply Rewards.

The building society said the cashback scheme was 'not sufficiently meeting the wider needs of members'.

Customers can continue to claim cashback up until the end date and will get the money paid directly into their current or credit card account within five working days of the purchase.

In January last year, the cashback rate dropped from 0.5% to 0.25% for existing Nationwide Select Card customers.

The Select Card is still available to customers.

Why are cashback schemes less common?

European Union regulations targeted at limiting card fees has made cashback less rewarding for card issuers.

The amount card issuers can charge retailers for processing payments (known as interchange fees) has been capped for the past three years.

Retailers can also no longer charge customers fees for using their card online or in stores.

As a result, card issuers are facing higher costs for transactions, which has led to some scrapping perks, including cashback.

Best cashback credit cards

Cashback schemes still exist but there are far fewer options than previously.

Last year Barclaycard announced a new cashback credit card, which offered a flat rate of 0.25% on purchases for over five years.

Yet this was the first new cashback card offered by a major bank in nine-months, according to financial information site Moneyfacts.co.uk.

The highest cashback rewards are offered by the American Express Platinum card, which offers 5% for your first three months, capped at £125. After that, you can earn 1% on spending up to £10,000 per year, and 1.25% on anything over £10,000. However, you'll have to pay a £25 annual fee.

Alternatively, the Santander All in One card offers 0.5% cashback on all purchases, with no spending limit, though the fee is a hefty £36. The Tandem Bank Cashback card also offers 0.5% on all purchases above £1, and will pay you for purchases abroad, too - plus with no annual fee, its APR is a comparatively low 18.9%.

The table below shows some of the best-value deals currently available, based on cashback offers and APR.

To find the right deal for you, you can compare hundreds of credit card deals on Which? Money Compare.

What are the benefits of cashback?

With a cashback credit card, you'll be paid back a percentage of what you spend in the form of a credit on your bill either monthly, quarterly or annually.

Depending on how much you spend, you could earn hundreds of pounds over the year.

To rack up the highest rewards, you could use your cashback credit card like a debit card for everyday spending. Just make sure you keep track of your total and put aside enough cash to cover your bill in full each month.

Find out more: best cashback credit card deals

What are the downsides of using cashback?

Some cards come with an annual fee, so you need to make sure you earn enough rewards to justify its cost.

Cashback cards are not ideal for borrowing, with generally high interest rates and few cards offering competitive 0% deals. If you can't clear your balance each month, then interest payments are likely to wipe out any rewards you earn.

You can use the calculator below to work out how much cashback you could earn.

 Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a provider before committing to any financial products.

 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.