M&S to slash credit card rewards
M&S credit card customers will see the rewards they earn slashed, as the provider is shaking up its loyalty scheme following EU-wide changes to card transaction fees.
Currently those with M&S Bank’s credit card, which is one of our top cashback cards, earn one point for every £1 spent in M&S, and one point for every £2 spent elsewhere.
Once you’ve earned 100 points, this is automatically turned into £1 worth of M&S vouchers and posted to customers four times a year – so you effectively earn 1% on M&S spending and 0.5% elsewhere.
But from 29 February, points on external spending are being slashed to just one point for every £5 spent outside of M&S – effectively just 0.2% cashback.
One unhappy customer tweeted: “1 point on every £5 spend is pathetic on M&S Credit Card. Hope all card holders vote with their feet.”
The bank says it’s the first change it’s made to the loyalty scheme since it launched in 2003, and confirms that no other terms are changing – including its 0% interest on spending for the first 19 months.
Why is M&S cutting back its rewards?
M&S Bank blames the loyalty scheme cut on new EU rules that cap the amount card firms charge retailers to process transactions – meaning many providers are recouping costs by slashing the value of reward schemes.
These so-called “interchange” rules came into force on 9 December 2015 and a number of major providers, including Capital One, RBS and Tesco Bank, have already scaled back cashback and loyalty point schemes.
An M&S Bank spokesperson says: “Following the introduction of new legislation in December 2015, which affected all UK card providers, we are making a change to the external loyalty points earned on the M&S Credit Card.”
It adds that it waited until February to make the cut to ensure points earned over the festive period were not impacted.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Cashback credit cards
These reward you with a small percentage of cash back on your total spend on the card, either each month or annually. Cashback cards carry high APRs and ONLY work if you pay your balance off in full every month. If you miss payments and have existing credit card debts, leave these well alone.