Last days of the cashback credit cards
Companies are instead moving to cheaper points schemes. Chiara Cavaglieri reports
Sunday 31 January 2010
Cashback credit cards are being pulled off the shelves and could soon vanish altogether, according to new research. A study by financial data provider Defaqto shows that more than a quarter of credit cards offered cashback as a reward for spending five years ago, but today fewer than one in 20 cards carries this incentive.
Credit card rewards usually fall into one of four categories: cashback, shopping rewards, points schemes and Airmiles. The number of cashback reward cards has fallen dramatically, while the other categories remain relatively unscathed. A total of 28.2 per cent offered cash in January 2004 but this year that figure has collapsed to 4.8 per cent. The percentage of cards offering points schemes or Airmiles has marginally increased since then.
David Black, a banking expert at Defaqto, thinks the cashback numbers will decline even further. "The card providers will seek to recover lost income by a combination of increasing rates, introducing annual fees, less generous introductory offers and reining back on reward schemes," he says.
Some providers will set caps or offer enhanced cashback only on specified retailers. Barclaycard's One Pulse credit card, for example, offers 5 per cent cashback on Transport for London (TfL) spend, but sets a cap of £15 cashback per month (the equivalent of spending £300 on TfL). Other cards will have introductory periods and tiered rewards, or even a monthly fee. The Egg Money card, which pays 1 per cent cashback on spending up to £20,000, has a monthly fee of £1, meaning consumers would have to spend £100 each month just to cover the fee.
Much of the popularity of cashback credit cards is down to the fact that there are fewer stipulations about how rewards can be spent. American Express offers the most generous cashback card around; its platinum card pays the top rate of 5 per cent on spending in the first three months, up to a maximum of £100.
Unfortunately, providers are instead concentrating on cards that offer points which must be redeemed against specified goods or services. Cardholders may also be required to send off for vouchers, making it that bit more difficult to get their hands on the reward.
Towards the end of last year, American Express issued another reward credit card, this time offering a tiered points system. The Express Rewards card offers three points for every £1 spent at major UK supermarkets, two points for every £1 spent at major UK department stores and one point for every £1 spent elsewhere. Once cardholders earn 5,000 points (£25), they can redeem them for vouchers and gift cards at specific retailers including iTunes and Marks & Spencer.
American Express says that this does not mean the end of its popular cashback card. "We will continue to offer the cashback offer for the foreseeable future. Rewards are part of our brand DNA if you will, and part of what we want to be known for," says spokesman Doug Smith.
However, many reward cards will often be scaled back or even pulled altogether once the provider has enough customers. The Shell MasterCard from Citi was launched with an introductory offer of 6p cashback per litre of Shell fuel for the first 60 days, then had a standard rate of 3 per cent cashback on Shell fuel purchases. In spring 2009 it was withdrawn to new customers and in October the cashback rate was reduced to 1 per cent, then withdrawn completely last month.
There are ways that consumers can get the most out of lenders and play them at their own game. Those with a good credit rating can change their credit cards on a regular basis to take advantage of introductory offers.
It may even pay to use more than one card to maximise the potential benefits, such as the Barclaycard One Pulse for travel and a John Lewis MasterCard for shopping. One card can be used for a 0 per cent balance transfer, and another for a 0 per cent purchase period to avoid being stung by having to pay off the most expensive debts first.
"If you're suitably disciplined it may pay you to use different cards for different expenditure," says Mr Black.
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 3 The ten most unequal developed countries in the world
- 4 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 5 Toddler throws a tantrum at the White House – in front of Barack Obama
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof