Finance Choices
More credit card rewards ditched
Consumers have witnessed a growing trend of credit card providers withdrawing the benefits and perks previously offered with their deals, and more are doing the same.
Sainsbury's Bank is the latest to withdraw its cashback and reward schemes, in a market which has found it harder to turn over profit since the advent of zero per cent interest offers.
The bank had been offering 0.25 per cent cashback on purchases or Nectar points. While existing customers will continue to receive Nectar points, the offer has been withdrawn for new customers.
Despite strong competition in the credit card market, more and more providers feel it is time to take away the kind of encouragement that up until recently was being used to lure in customers from their competitors.
Samantha Owens, head of research at Moneyfacts.co.uk, said: "With zero per cent interest deals reportedly costing the card industry in excess of £1 billion per year and many high street banks reporting a steep increase in bad debts, it is not surprising to see providers taking measures to reduce their costs.
"It is now becoming increasingly difficult for customers to find a card which offers them the kind of benefits that were common place a year ago.
"Not only have cashback deals been severely cut or in a number of cases totally withdrawn, but incentives such as Nectar points and AirMiles are also less widely available," she added.
Other banks and credit card providers who have ditched their reward and cashback schemes include Egg, Blue Amex, HBOS, and Mint.
Sainsbury's Bank is the latest to withdraw its cashback and reward schemes, in a market which has found it harder to turn over profit since the advent of zero per cent interest offers.
The bank had been offering 0.25 per cent cashback on purchases or Nectar points. While existing customers will continue to receive Nectar points, the offer has been withdrawn for new customers.
Despite strong competition in the credit card market, more and more providers feel it is time to take away the kind of encouragement that up until recently was being used to lure in customers from their competitors.
Samantha Owens, head of research at Moneyfacts.co.uk, said: "With zero per cent interest deals reportedly costing the card industry in excess of £1 billion per year and many high street banks reporting a steep increase in bad debts, it is not surprising to see providers taking measures to reduce their costs.
"It is now becoming increasingly difficult for customers to find a card which offers them the kind of benefits that were common place a year ago.
"Not only have cashback deals been severely cut or in a number of cases totally withdrawn, but incentives such as Nectar points and AirMiles are also less widely available," she added.
Other banks and credit card providers who have ditched their reward and cashback schemes include Egg, Blue Amex, HBOS, and Mint.
posted by Bruce Wayne at 6:42 AM
More credit card rewards ditched
1 Comments:
There is a ton of consolidation in the Credit Card market right now. After the MBNA, Metris and Providian mergers are complete, the top 10 credit card issuers (US Domestic) will control over 90% of the market. With that consolidation comes less competition many times. Should be interesting to see the Bank of America/MBNA merger as there is somewhere in the range of 40% overlap.
In the UK, credit quality has been deteriorating quite rapidly over the last year which might explain why credit card companies have stopped offering these reward plans. I dont have the charge off numbers for the different trusts so it is hard to say.
A lot of the credit card companies are moving to a "premium" card structure in order to pay those rewards. That means merchants get charged a slightly higher interchange. You as the consumer will never know that though.
Card growth has slowed and is only growing at around 2-3% right now. Teasers still make money for them given that most people mess up and lose the teaser rate anyway. Also, on the zero% balance transfers, if you continue to use your card, all your payments go to paydown the zero percent balance first.
Post a Comment
<< Home