The best alternatives to the Santander 123 Cashback Credit Card

Santander has capped the amount of cashback you can earn and hiking the cost of borrowing on the popular 123 Credit card. Here's where you can go for a better deal.

Santander has capped the amount of cashback its 123 Credit Card customers can earn from today (February 1).

The popular credit card, which closed to new customers last year, will only pay a maximum of £9 a month – or £6 once you factor in the £3 monthly fee.

The bank is also hiking the rate of interest on purchases from 12.7% to 15.9%, which means borrowers outside an introductory 0% offer will have to pay more on their borrowing unless they repay their debt in full each month.

This is the latest blow to Santander customers who use the bank's popular 123 products.

Last year, the bank hiked the fee on its 123 Current Account from £2 a month to £5 a month and, in November 2016, cut the the interest rate on the account from up to 3% to a flat rate of 1.5% on balances up to £20,000.

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What’s changed?

Santander 123 Credit Card users were previously able to earn 1% cashback at supermarkets and 2% at department stores without any limit and 3% cashback on travel spends up to £300 a month.

Now, the amount you can spend to earn cashback will be limited to £300 at supermarkets, £150 at department stores and £100 a month on travel.

The changes mean that customers will only be able to earn a maximum of £3 for each type of spend, amounting to just £9 a month. 

Customers will have to weigh up whether the deal still makes sense for them considering the card also attracts a £3 monthly fee.

The new caps already apply to new customers who signed up after September 15, while existing customers will have the limit imposed from today.

Santander says the cut to cashback is down to the EU cap on interchange fees introduced last year to limit the amount card companies charge retailers for card transactions.

The interchange fee cap has been blamed for a number of other cashback and reward schemes on credit cards having to be scaled back or scrapped at RBS, NatWest, Tesco Bank and Capital One.

However, there are still better deals around.

The best alternatives

If you have the Santander 123 Credit Card and aren’t happy about the changes you could switch to a new cashback credit card deal that is more rewarding.

You could go for the Santander All in One Credit Card which offers 0.5% unlimited cashback on spending at home and abroad as well as 41 months 0% on balance transfers with a 1% fee. The card attracts a £3 monthly fee and has a representative APR of 21.7%.

There’s also the Asda Cashback Plus Credit Card which offers 2% unlimited cashback at Asda and 1% unlimited cashback everywhere else.

The card comes with a £3 monthly fee and representative APR of 26.2%.

Alternatively you could go for the fee-free Asda Cashback Credit Card which offers 1% unlimited cashback at Asda or 0.5% unlimited cash elsewhere. The representative APR is 19.9% on this card.

The AA fuel Save Credit Card is another good alternative. It offers 4% cashback on fuel when you spend £500 or more every month or 2% cashback when you spend less. The card offers 0.5% cashback on all other purchases capped at £150 a year.

The card also comes with one year’s breakdown cover and a free MOT for every year you hold the card. There’s a £42 annual fee to consider on this option though and the representative APR is 22.4%.

There’s also the American Express Everyday Platinum Cashback Card, which offers a leading 5% cashback capped at £100 in the first three months and tiered rates depending on how much you spend up to 1% after that.

It's fee-free and has a representative APR of 22.9%.

Not interested in cashback? Check out other great credit card deals with loveMONEY

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