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Published: 11/09/2017

Reward credit cards have long been used as a way for financially savvy individuals to make their money go further, as they're getting something back by simply spending what they were going to anyway. However, in the last few years there's been a definite downturn in the sector as perks are being noticeably cut, which makes it even more important to ensure you're getting the best deal.

Declining market

Providers seem to be announcing that they're slashing reward and cashback rates on a regular basis, with MBNA being the latest to join in – it's scrapping its Rewards Credit Card and Credit Card with Cashback from 22 September, with existing customers no longer able to earn points or cashback from that date and existing points having to be redeemed by 30 November.

Customers currently earn one point per £1 spent or 0.5% cashback, depending on the card chosen, but they'll soon be moved onto a standard Visa card with no such perks. This follows Barclaycard's announcement earlier this summer that it was scrapping its Amex cashback card and transferring customers onto a Visa card paying cashback of 0.5% instead of the current 1%.

This only adds to the trend seen in recent years, with cashback deals being particularly hard-hit – whereas it was once relatively easy to find standard cashback rates of 3%, our data shows that most cashback credit cards now only pay rates of 0.50% or 0.25%, with even the best clocking in at around the 1% mark, unless you pay a fee or get an introductory deal.

Why the change?

The market was booming just a few years ago, but an EU ruling in 2015 put paid to all that. The ruling put a cap on interchange fees – the fees that card providers charge retailers for accepting those cards, which often stood at around 0.8% per transaction, and meant providers were able to make a lot of money every time a customer paid by plastic.

However, as of December 2015, the charge was capped at 0.3% for credit cards and 0.2% for debit cards, with the idea behind it that businesses would no longer have to pass excessive fees onto their customers. Yet customers have lost out in another way: the ruling significantly hit card providers' income, which meant they've been looking for ways to claw back some of their profit, and reward cards have been targeted.

"Since the ruling, cards with rewards have become far less fruitful, and providers have had to assess how they can recoup their costs," explained Rachel Springall, finance expert at Moneyfacts. "They could add card fees, but one of the easiest options is to limit the rewards that they are prepared to offer, and findings show this is exactly what many have done.

"This ruling has caused the removal of lucrative reward deals [and] has been detrimental to consumers, who will now find it very difficult to get something back on their everyday spending as the cashback credit card market has eroded."

Think outside the box

Given the landscape at present, it's probably worth thinking outside the box if you want to get the most of rewards. Start by looking at your current account – these days, a growing number of providers are offering cashback when you spend by debit card as well as credit card, such as TSB's Classic Plus account (£5 cashback paid when 20 debit card purchases are made in a month, and an extra £5 cashback for holding two direct debits) and Nationwide's FlexDirect (which offers cashback on selected purchases through its Simply Rewards scheme).

If you shop online, make sure to go through a cashback website, too, as these can offer great cashback deals that can quickly add up in your account. And if you still want to see what you can get through cashback credit cards, make sure to check out our Best Buys – the top pick currently comes from American Express, with cashback of 5% for the first three months and up to 1.25% thereafter.

If you're opting for a credit card, just make sure that you can afford to repay the balance in full each month – standard APRs have risen on these cards in the last few years, with rates of up to 49.8% (from Santander) now possible compared with a top rate of 34.5% in 2012 – otherwise the interest you'll be charged could more than outweigh any cashback earned.

What next?

Make sure your credit score is up to scratch if you're thinking of applying for any form of credit

Compare the best cashback credit cards and reward deals

Consider current accounts for an alternative means of accruing cashback


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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