Here, we take a closer look at how the re-vamped Santander 123 card works to help you decide whether it could be the right choice for you…
What’s the deal?
The Santander 123 Credit Card enables you to earn 1% on any spending at supermarkets - in store or online; 2% on purchases made in department stores and 3% on your fuel spending. From Monday, September 24, the 3% on fuel spending will be extended to include National Rail travel and Transport for London tube, train and bus travel.
The maximum you can earn on travel spending is £9 a month, which means you'll stop earning cashback for that month if you spend more than £300 on fuel or rail and Transport for London travel, or a combination of these. However, there's no upper cap on the amount you can earn on supermarket or department store spending.
The cashback you earn is credited to your account each month. This differs from most other cashback cards which credit it annually.
If you don’t clear your bill in full each month, you will be charged interest at 18.9% which will outweigh the value of any cashback you’ve earned. And combined with the annual fee of £24, the representative annual percentage rate (APR) is pushed up to 22.8% (variable).
The biggest drawbacks of this card are its annual fee, and the fact that you only earn cashback on selected spending.
While it is great that the cashback on fuel spending has been extended to include rail and Transport for London, the overall cap has not been changed, so it won’t benefit those who spend more than £300 on transport each month.
You also cannot earn cash back on Transport for London travelcards, passes and Oyster Card top-up purchases made at newsagents, garages and off-licences, NI Railways train tickets purchased online, or Eurotunnel Le Shuttle tickets and train tickets bought from travel agents or tour operators.
If you want a credit card which offers the same level of cashback on all your spending, then you may want to consider the American Express Platinum Cashback card, although it is worth bearing in mind that Amex is not always accepted everywhere
This card offers 5% cashback on your first £2,000 spend within the first three months. Once the introductory rate ends, you’ll earn the standard rate of cashback which is 1.25%. Customers also receive double cashback, 2.5%, every year during their anniversary month (the month they first took the card out in) as long as they’ve spent £10,001 or more on their card over the previous 12 months. There is, however, an annual fee of £25 with this card, which pushes the representative APR to 18.5% (variable).
Another option worth considering is the Capital One Aspire World Mastercard which offers 5% cashback for the first three months (up to a maximum of £100) and then up to 1.25% thereafter.
You earn 0.5% on the first £5,999.99 spent on the card, 1% on spending between £6,000 and £9,999.99 and 1.25% on spending above £10,000. The representative APR on this card is 19.9% (variable).
What’s the verdict?
The Santander card is an excellent option for anyone who uses a credit card to cover their everyday costs. For commuters who rely on train and Transport for London transport rather than their cars, the decision to extend the cashback to these forms of travel will undoubtedly increase the card’s appeal.
However, you must be disciplined about paying your balance off in full each month, otherwise the interest you are charged is more than likely to wipe out the benefit of any cashback you earn.
Set up a direct debit to pay your credit card bill each month so that you don’t miss a payment. That way you don’t have to remember to do it each month and you can be certain that you won’t end up having to fork out for interest charges.
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