Shopaholics mourn death of cashback deals

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The Independent Online

Cashback is taking a kicking. Last week, Nationwide joined the growing list of lenders abolishing or cutting back on the credit card perk.

After halving the cashback rate on its Cash Reward to 0.25 per cent last March, the building society closed the card to new business on Wednesday. However, the 0.25 per cent deal will be continued for existing cardholders - for now, at least.

Nationwide is following, albeit at a distance, in the footsteps of several other providers that no longer offer cash rewards to cardholders.

Sainsbury's Bank dropped the perk for all its customers in August, not long after the Halifax had shelved the incentive on its One card.

Credit card providers have used schemes such as cashback in the past to encourage people to apply for their plastic; after all, money for nothing is an attractive proposition. Customers stand to benefit as long as they pay off their card in full at the end of the month.

However, credit-card watchers think cashback has had its day. "Over time, we'll see more [providers] killing it off," says Daniel Newbolt from financial analyst Moneyfacts. "Nationwide's decision was a reaction to the fact that cashback cards have not been all that popular.

"In some cases the rates have not been particularly high - typically 1 per cent - while the annual percentage rates (APRs) on the cards themselves have been higher than those on the providers' other products."

He adds that the cards are of little value unless you are making big purchases - or are a shopaholic. "If you're a normal spender, there are many other priorities - such as the fees levied and the APR.

"For most, cashback should simply be a bonus."

If you are tempted, the Morgan Stanley cashback card offers 2 per cent for the first £2,000 spent and 1 per cent on spending over this amount. This offer lasts only until May and the standard APR on the card is 15.9.

Elsewhere, Amex Blue has a generous-sounding but convoluted deal. The crucial sum is £2,000. Spend less than this over 12 months and, apart from an introductory three-month period earning 1 per cent, you'll get 0.5 per cent on any spending. However, if you spend more than £2,000 over a 12-month period, you'll earn 2 per cent in the first three months and 1 per cent for the rest of the year.

The Halifax's Moneyback current account offers up to £100 cashback a year on its debit card.

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