Every year Capital One credit card users could look forward to the benefit of hundreds of pounds worth of cashback offers. However the card provider has now decided to cut this perk for its existing customers and remove the feature entirely for any new customers that join.
EU restrictions are being brought in from October that cap what are referred to as “interchange fees”. These fees are given to card providers by retailers when somebody uses a debit or credit cards to purchase items from them. The new cap will stand at 0.2% for debit cards and 0.3% for credit cards. This is a big drop from the current amounts being paid that stand at around 0.45-0.95% according to director of DJB Research, David Black.
Credit card companies have been able to offer reward schemes because of the amount of money that they made from transactions in these retailers in the past. With the new changes though, these companies will no longer be able to afford these incentives.
Andrew Hagger from Moneycomms.co.uk said:
ìAs well as cutting reward benefits, watering down cashback offers or increasing interest rates, we could see promotional 0% purchase and balance transfer deals become less prominent. Plus, there is the possibility that weíll see more cards introducing a monthly or annual fee.î
Rachel Springall from Moneyfacts.co.uk stated:
ìThese enticing deals were never designed to be offered forever, and with the new EU ruling on interchange fees coming into place in October, many card providers will be reviewing schemes to see whether they are sustainable.î
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