Barclaycard shake up cash back: five credit cards scrapped

Credit: David Cardinez/Shutterstock.com

The new 'simply cash back' credit card offers a return of 1% on purchases made on an American Express card, while a Visa card earns at half that rate.

Around 700,000 Barclaycard customers that hold one of the following cash back deals will be moved to the new card:

• Choice;
• Visa cash back;
• Mastercard cash back;
• Barclaycard High 5 cash back and
• Barclaycard World Mastercard (held by former Egg customers).

Barclaycard say the new product offers what their customers want: a simple, flat rate cash back deal.

Two cards, two rates: simpler deal?

Some Barclaycard customers don't agree, however.

The most striking thing about this new deal is that it's actually made up of two cards: an American Express and a Visa.

It's not that unusual, Lloyds Bank and TSB have a similar set up for their Avios earning credit card deals and so does MBNA for their Virgin flying miles cards, but it does mean that cardholders face missing out on half their cash back when the American Express card isn't accepted.

"This is an underhand way of saving money for Barclaycard," said a cardholder on the Moneysavingexpert forum after receiving a notification about the changes last week.

"American Express is not accepted by as many companies as Visa so there will be occasions where I will have to use the Visa card which only pays 0.5% instead of 1%. It also means I will have to carry two cards around instead of one," they added.

These concerns might be a bit misplaced, however.

When we looked into American Express acceptance in August 2012 we found that the vast majority large retailers accepted the card and so did about 50% of the small independent businesses we polled.

Losing purchase protection

Another downside for some cardholders will be losing insurance on purchases made with the card.

For example, the World card previously offered a number of insurances including an extended warranty,
purchase protection, event cover and travel accident cover.

Again, though, cardholders might want to consider how much they're really losing here.

Event cover, for example, is insurance which can refund the cost of tickets if the cardholder misses, say, a football match or a gig. But the list of exclusions is so long that policyholders are unlikely to ever be able to claim.

The other insurance products are similarly low quality, although it's still a shame that cardholders are losing them.

Goodbye to tiered rates

Other changes are more positive.

Some of the cards above currently charge a £12 annual fee. That has now been scrapped.

In addition, there's no maximum earning cap with the new card and no tiered rates.

Low to average spenders currently on tiered rates will almost certainly earn more cash back as a result of this change: those with tiered rates currently don't reach the 1% rate until they've spent a considerable amount, usually £1,500.

Tiered rates and teaser rates like a high cash back earning rate for the first few months of holding a card are perhaps the main way that card providers seek to entice new cardholders on to rewards deals.

They make it hard to work out long term earnings, though the short term advantage will no doubt put them ahead of Barclaycard for many.

First Barclaycard/American Express deal

The new cash back deal is also notable for being Barclaycard's first issued by American Express since the two signed a deal in January of 2013.

Valerie Soranno Keating, Chief Executive of Barclaycard said that the deal reinforced, "Barclaycard's position as a partner of choice in the payments industry and as a leading innovator in UK payments."

Almost all of the credit cards issued by the mainstream banks are currently issued by Mastercard or Visa.