American Express cuts cashback on its market-leading credit cards in half from this week: Should customers head elsewhere?
- Amex offers fee-free and £25-a-year cashback credit cards paying up to 1.25%
- The payouts will be cut back depending on how much is being spent
- Those who spend between £5,000 and £10,000 on the free card are most hit
- The cards remain the best cashback deals around
American Express and its market-leading cashback credit cards are getting a little less generous, with the provider slashing how much customers earn by as much as 50 per cent in some cases.
Payouts on the free American Express Platinum Cashback Everyday and £25-a-year Platinum Cashback credit cards can currently total hundreds of pounds a year with cashback rates of up to 1.25 per cent.
However, for newcomers from today and for existing customers from 4 August, cashback rates will be cut.
American Express is cutting the cashback paid on some of its credit cards
The free card currently pays 0.5 per cent on up to £5,000 a year and 1 per cent cashback on spending above that. However, under the changes all spending of up to £10,000 will only earn 0.5 per cent.
Spending above £10,000 will net the same return, but those who spend between £5,000 and £10,000 could see what they earn halve.
Meanwhile, the £25-a-year card currently pays 1 per cent on spending of up to £10,000 a year, and 1.25 per cent cashback on spending above this. But following the changes, the cashback earned on spending of up to £10,000 will be cut by a quarter to 0.75 per cent.
Both cards come with generous sign-up bonuses of 5 per cent cashback on purchases made within the first three months, capped at £125 for the paid-for card and £100 for the fee-free version. These are unaffected by the changes.
But despite the cuts eating into cardholders’ returns, Rob Burgess, editor of frequent flyer website Head for Points, said they did not make a substantive difference to the cards.
‘These cuts don’t change our view of which card is best’, he said. ‘The break-even point remains at £10,000. Put another way, if you spend more than £10,000 per year, you should pay the £25 annual fee. If you spend less than £10,000 per year, it isn’t worth it.
‘Stick with the free Platinum Cashback Everyday card.’
|Card||Old cashback on £5,000||New cashback on £5,000||Old cashback on £10,000||New cashback on £10,000||Old cashback on £20,000||New cashback on £20,000|
|Platinum Cashback Everyday||£25||£25||£100||£50||£200||£150|
|Santander All in One Mastercard||N/A||£-11||N/A||£14||N/A||£36|
|Barclaycard Rewards credit card||N/A||£12.50||N/A||£25||N/A||£50|
|Source: This is Money/Head for Points (figures are net including fees)|
Spending £5,000 would earn £12.50 on the £25-a-year card after the fee was taken into account, and £25 on the free card, despite the lower cashback rate.
Spending £10,000 would earn £50 after fees, and the same sum on the fee-free version. But spending £20,000 would earn £175 on the Platinum Cashback card, compared to £150 on the Everyday card.
He added: ‘These are still good cards, despite the cut in the cashback rates. However, low spenders have less to get excited about.’
The Amex cashback cards feature in This is Money’s guide to the best credit cards and both remain among the most generous offers around. The only comparable deal is offered by Santander.
Its All in One Credit Card Mastercard pays 0.5 per cent cashback on purchases, and offers a range of other benefits, but comes with a monthly fee of £3, or £36 a year.
Meanwhile Barclaycard, which has been in the headlines in recent weeks for announcing drastic cuts to borrowers’ credit limits, offers a card which pays 0.25 per cent cashback on all purchases. It also comes with fee-free overseas spending and an APR of 22.9 per cent.
By contrast, the fee-free Amex has an APR of 22.2 per cent and the £25-a-year one 27.3 per cent.