In a competitive credit card market, providers are clamouring to offer reward points, air miles or cashback, and increasingly lengthy 0% balance transfer periods. As well as up to 3% cashback on some everyday spending, Santander’s 123 credit card is offering extra cashback on holidays, hotels, flights and more until the end of August.
But is it really worth the same hype as its sister, the 123 current account, which has switchers flocking to its combination of interest and cashback?
What’s the deal?
Santander’s 123 credit card claims to offer great value on everyday purchases by paying cashback on a tiered system. Cashback can be earned at the supermarket checkout, in department stores, at the petrol station pumps, and even on National Rail and Transport for London travelling. Here’s a quick look at how it works:
- 1% cashback at supermarkets, including M&S, Morrisons, Asda, Sainsbury’s, Waitrose, Tesco, Co-operative and Budgens. If you spent £400 at Waitrose this month ,your account would be credited with £4 next month.
- 2% cashback at department stores, including BHS, Debenhams, House of Fraser, John Lewis, Fenwick, Harvey Nichols, Selfridges, and even Mothercare. For instance, if you spent £100 at Selfridges, you’d see £2 credited on your next monthly statement.
- 3% cashback on travel, including at most major petrol stations, on National Rail and on Transport for London travel (on a combined spend up to £300 a month). Most petrol station brands qualify, and cashback can be earned on any rail tickets covered by National Rail using any of the major carriers. So, if you spent £300 this month on some petrol and train travel, you’d earn £9 on your next statement. Although be aware that the greatest amount of cashback available on travel each month is £9, even if you spend over £300.
There are some exceptions:
- TfL Oyster card top ups, travelcards and passes purchased at newsagents, garages and off licences are not eligible for cashback
- Northern Ireland train tickets purchased online, train tickets purchased through travel agents and tour operators, and Eurotunnel Le Shuttle tickets are also not eligible for cashback.
- There may also be some exceptions to the rate of cashback offered. For example, M&S is seen as a supermarket by Mastercard rather than a department store. Some petrol stations may also be classed as supermarkets depending on how Mastercard categorises the retail brand.
To illustrate, if you spent £3,000 on flights and accommodation using your 123 card, you’d earn £30 on next month’s statement. This might not sound like a lot but it could add up if you combined it with some everyday travel and shopping purchases.
What you should know
- There’s an 18-month 0% interest period on purchases – after that a 12.7% p.a. standard purchase rate will apply. This is equivalent to 16.5% APR representative variable based on an assumed credit limit of £1,200 with a £24 annual fee. During the 0% period, you’ll need to pay at least the minimum amount each month to avoid any fees or interest. See the full details of fees and interest.
- There’s a cash transactions interest rate of 29.9% p.a.
- Crucially, there’s a £24 annual fee for using the card, payable in the month you open the account, and every year after that. However, if you also open or already have a Santander 123 current account, they’ll refund the first annual fee.
- There’s a 2.95% non-sterling transaction fee for making purchases abroad. Other charges for using the card abroad may apply – check the terms and conditions for more information.
- Credit is available subject to status, permanent residence in the UK, proof of identity and age over 18.
- You’re a commuter – with 3% on fuel, train and London transport tickets up to a £300 monthly spend (which pays a maximum of £9 cashback), it rewards those who spend big on travel each month. While it might not put a huge dent in something like the cost of a monthly London Zone 1-5 travelcard (currently £205.10), earning up to £9 a month on your commute can be a nice little earner.
- You regularly pay off your credit card in full each month – if you don’t, the 18 month 0% interest-free period may come to an abrupt end, at which point you’d be on their 12.7% p.a. rate which is variable.
- You already have a 123 current account (or you’re going to open one) – then you don’t have to pay the £24 fee for the first year.
- You intend to use the card for the majority of your everyday spending – while the cashback rates are great, they won’t amount to much if you don’t shop at the supermarket, fill the car up, buy rail tickets or hit the department store using the card.
If you’d rather keep the majority of your spending on a debit card, to avoid paying off a balance, take a look at the Santander 123 current account which has a £2 a month fee but also gives interest on in-credit balances as well as tiered cashback on everyday spending.
Not so good if…
- You’d like to transfer your balance from another card – the 0% interest-free period is cut down to just one month, and you may be charged up to 5% as a fee to transfer.
- You’re not a big spender in the supermarket, on transport or in department stores – other cards may offer cashback on more general spending. For instance, if you walk or bike to work, or don’t travel very far, you’re unlikely to earn much by way of 3% cashback with the card. Also, balance your expected cashback earnings against the fee.
If you’re not prepared to put your everyday spending on a credit card, you might not earn enough to cover the £24 annual fee. Handily, Santander provides a cashback calculator to see how much you could earn.
Please note: rates and details in this article were correct at the time of posting – please check with the product provider before applying. Credit subject to status.