Points don’t always mean prizes with credit cards
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Points don't always mean prizes with credit cards

Points don’t always mean prizes with credit cards

They’re the high street name credit cards which offer you a little bit extra when you spend – they’re the credit cards which give you loyalty points for your favourite shop, no matter where you’re spending. For example – want Tesco Clubcard points when you shop at Asda? Just pay on a Tesco Bank credit card. It’s a win-win situation for you, because you’re looking forward to those Tesco vouchers which you can double up, or use on your groceries.

The problem appears to be that too many of us have fallen in love with the idea of getting rewarded for our spending, and handing over those rewards is starting to upset the voucher issuers. They’re biting back, and you may find that it’s suddenly not so easy to get enough vouchers for that lavish Christmas dinner, or that coat you’ve had your eye on.

The latest cautionary step back is from Marks & Spencer, whose HSBC backed credit card has just the line up of cutbacks on loyalty rewards which customers can receive when spending on it. Prior to March 2016, the reward scheme awarded shoppers one point for every £1 they spent in a Marks & Spencer shop, and if they shopped elsewhere, a point was awarded for every £2 the customer spent on the M&S credit card. Starting from March, the rules are now different. If you shop somewhere other than Marks & Spencer, you’ll only get one point per £5 spend. With each point worth 1p, you’ll need to spend £100 in Marks & Spencer to get a £1 reward voucher, and an eye watering £500 in other stores to earn the same £1 voucher. Prior to the changes, it was only a £300 spend elsewhere to get that £1 voucher. Vouchers for any earned points will still be sent out quarterly.

Marks & Spencer are not the only high street shop’s bank to take this action, with several names cutting either rewards or cashback in the last 12 months. One of the most popular choices in cashback cards, Capital One, stopped its cashback earning credit card in June 2015, and the RBS Group’s Your Points card was discontinued not long after that. When asked why they’d taken this action, the reason seems to be based on an EU ruling, capping the amount which companies are allowed to charge credit card processing merchants when a customer pays with plastic, rather than cash.

The intention of this EU ruling was that shoppers would feel a benefit – if shops weren’t having to pay as much in transaction fees to their card processing merchants, prices of goods and services should fall. It hasn’t quite worked though, and rewards and cashback have been cut back instead, with providers like M&S Bank arguing that they were paying for the reward vouchers with the profits made from these transaction fees.

Santander quite explicitly put the blame at the European Parliament’s door when it raised its annual charge for the 123 Credit Card, and the rewards on offer from Sainsbury’s Bank and Tesco Bank also suffered savage cuts as a result.

Ultimately, you’ll have to decide for yourself whether you’re happy to continue with a store based credit card which offers rewards. If you’d be shopping there regularly anyway, for example to buy groceries, you may find more benefit with a reward card than any other type. If you suddenly find your credit card isn’t quite as rewarding as you’d originally hoped, it might be time to investigate your options elsewhere.

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