Rachel Springall, Finance Expert at Moneyfacts.co.uk, comments: “Behind the spotlight on trendy introductory credit card offers, the cost of debt has risen to a record high of 20.6% APR*. At the same time, fears for the future of reward cards have increased, as their demise in the wake of the new ruling by the EU on interchange fees becomes a distinct possibility.

“In light of this ruling, providers will need to find other ways of recouping their costs. Aside from adding to card fees, various methods are likely to be weighed up. One option is to raise the underlying interest rate, but one of the easiest is to withdraw reward schemes or interest-free offers.

“This would seal the fate of reward and cashback deals, which have already been in decline. A measly 7% of credit cards currently on the market offer cashback and just 37% offer rewards.

“Gone are the days when you had a choice of rewards and the ability to earn up to 6%** in cashback. In 2006, and again in 2012, almost half of the cards on the market (47%) offered rewards, which when compared with today’s figures, highlights the extent to which reward schemes have already diminished.

“Unsurprisingly, treating customers to rewards is never a guarantee, as even existing card holders can have deals ripped away***. Some providers may currently be sitting on the fence as to whether they will pull their cashback deals, but if they do decide that the offers are no longer sustainable, then they will remove or reduce them quickly.

“Those who diligently pay off their card debts each month to make the most of these perks will take the biggest hit if their offer is pulled. However, they could instead consider moving to an American Express cashback card, as these are not directly impacted by the new ruling, unlike Visas and MasterCards.

“Consumers who do consider using a cashback card must keep in mind that the best deals charge annual fees, so they must make the most of the cashback to offset this cost.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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