Why I’m Glad I Ditched My Santander 123 Credit Card

Written by Karen Bryan

santander 123 credit cardI was initially very happy with my Santander 123 Credit Card. It offered 0% interest on both purchases and balance transfers (with no balance transfer fee) for 23 months.

In addition, I was able to earn cashback on specific categories of spending. The highest rate of 3% cashback was paid on fuel for the car and train travel (including Transport for London), up to a maximum spend of £300 per month. The 2% cashback was paid on department store spending. I hardly ever buy anything in department store. The 1% cashback was paid on supermarket shopping, but I could already earn 1% cashback by using my Barclaycard American Express card.

As I have a Santander 123 Current Account, the £24 annual fee on the Santander 123 Credit Card was waived for the first year.

I had to pay the £24 annual fee for the second year. But this fee was more than covered by the 3% interest that I was earning on the cash put aside into the Santander 123 Current Account to pay off my balance transfers and new transactions made on the credit card.

However, by the start of the third year of having the Santander 123 Credit Card the annual fee had increased from £24 to £36 i.e. £3 a month. I had already paid off the full balance before the end of 23 month 0% promotional period, so I wasn’t getting the benefit of earning interest on the balance. I don’t travel by train often. We spend an average of £60 a month on diesel, equating to cashback of £1.80, which wouldn’t even cover the £3 monthly fee.

It was time to ditch the Santander 123 Credit Card.

My decision was vindicated when I read that from 1 February 2017 Santander are going to reduce the caps on the cashback paid on their 123 credit card.

From that date, the cap on fuel and rail travel spending eligible for cashback will reduce from the current £300 to £100, equating to a maximum monthly cashback of £3. The maximum eligible monthly spend in department stores will be £150, equating to a maximum monthly cashback of £3. The maximum eligible spend in supermarkets will be £300 a month, again equating to a maximum monthly cashback of £3.

If you are sure that you will spend a minimum of £100 a month on fuel and rail travel, plus a minimum of £300 a month in supermarkets on the Santander 123 Credit Card, then you would still net £3 a month i.e. £36 a year, after deduction of the £3 monthly fee.

However, you might be able to earn more than £36 a year in cashback by using a credit card, such as the Nationwide Select Credit Card, which has no annual fee and offers unlimited cashback of 0.5% on all spending (not just specific categories of spending).