Tesco Bank has become the latest financial services provider to slash its rewards scheme after revealing plans to half the number of Clubcard points it offers to just one point for every £8 spent outside its stores.
Despite protests from a number of the bank’s 2.8 million customers, the retailer insists its hand has been forced by changes to EU rules, which have capped the amount card providers can charge each other for processing payments.
But with rival Sainsbury’s already halving the number of Nectar points it dishes out for non-financial products, Tesco also needs to compete harder. Analysts believe that the Clubcard scheme is likely to come under very close scrutiny. It recently closed its Fuel Save programme.
Over the summer, Capital One axed cashback for all new customers and existing cardholders have seen offers reduced or removed.
Meanwhile, RBS and NatWest are also halving the rewards on their joint Cashback Plus loyalty scheme. From December, shoppers will earn just 0.5% of their spend back on qualifying purchases at partner retailers including Tesco, BP, Cineworld, and Caffe Nero.
Rachel Springall from Moneyfacts.co.uk said: “We have already seen providers withdrawing or reducing their rewards well before the EU changes come into place and with a big brand like Tesco changing their rewards, it’s highly likely other card issuers will be assessing whether they can sustain their own deals.”
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