Cashback on British credit cards is in danger of death by a thousand cuts.
This financial perk - money for nothing if you repay your card debt in full each month - is ailing by the month as more lenders join the list of providers reducing cashback.
Nationwide building society customers have been the latest to suffer. From 1 March, people already holding its Cash Reward card saw their rate on purchases halved to 0.25 per cent, while new customers now earn only 0.5 per cent during a six- month introductory offer; it used to be 1 per cent.
Nationwide is only following in the footsteps of Egg, the Halifax, Bank of Scotland, American Express, easyMoney and Accucard, all of which have pared back the perk in the past 12 months.
Egg set the ball rolling in April last year when it chopped its 0.5 per cent cashback on all purchases to a meagre 0.1 per cent.
In October, Accucard and easyMoney both lopped 0.3 per cent off MasterCard cashback purchases of up to £20,000. The rate fell to just 0.5 per cent.
The cashback clampdown is all about card firms trying to save money, says Samantha Owens from financial analyst Moneyfacts. "In recent months it has become more apparent that providers are feeling the pinch. We see that not just in [lower] cashback rates but also [fewer] interest-free deals."
Despite the cuts, there is the odd reprieve. Morgan Stanley recently bucked the trend with a promotional offer of double cashback on new Platinum cards - paying 2 per cent on the first £2,000 of purchases made and 1 per cent thereafter until 1 August (at which point it will pay 1 per cent and 0.5 per cent). Existing customers will continue to get just 1 per cent on the first £2,000 and then 0.5 per cent.
"This is simply an introductory offer to attract customers at a time when so many rival providers are cutting their benefits," says Ms Owens.
She recommends Amex's Blue credit card. This offers cashback of 2 per cent for the first three months, though there is a £15 annual fee if you don't spend £500 inside 12 months. The rate is then 0.5 per cent for balances up to £2,000, and 1 per cent above this.
Since February, the Halifax has offered cashback on current accounts. It pays 1 per cent on debit card spending of up to £10,000 a year, giving a maximum cashback of £100.
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