Tandem Bank to charge fee for cashback credit card

Existing Tandem Cashback customers will have to pay the monthly fee from 9 March 2020 if they want to keep their card.

This £5.99 fee signs them up to Tandem Membership which comes with an easy access savings account and no interest on purchases or cash withdrawals.

Tandem says these changes are required to keep their business sustainable while still making a difference to their customers.

The Tandem Journey credit card and fixed savings products will be unaffected by these changes.

Credit: Barabas Csaba/Shutterstock.com

Membership model

The Tandem Cashback credit card was launched in 2018 and, until now, was a free credit card which offered 0.5% cashback on spending both in the UK and abroad. It also boasted no foreign transaction fees.

Tandem customers using this card have received an email which invites them to join the new Tandem Membership scheme. If they opt out of this, their cards will stop working by 9 March and the credit agreement will be considered complete when the balance is settled.

Tandem Membership will initially only be open to existing Cashback card customers and will offer the following benefits:

- 0% interest on purchases and cash withdrawals, dropping from the existing variable 18.9% to 29.9% rate.
- Access to an easy access savings account with an interest rate of 1.5% AER variable.
- Continuation of no fees on spending and cash withdrawals overseas.
- Continuation of 0.5% cashback on worldwide purchases over £1.

For any Tandem Cashback customers considering opting into Tandem Membership, it should be remembered that the annual fee would be £71.88, and the rewards may not outweigh these membership costs.

Why is Tandem changing?

Tandem's response to why they're changing their cashback card model is twofold: they say they want their offer to be 'sustainable' while also offering products which deliver 'helpful features and more value than ever before'.

Currently, Tandem is a challenger bank in the sense that they provide credit cards and fixed savings accounts, although they don't offer current accounts in the way some other challengers like Monzo and Starling do.

While the need to become more sustainable is a crucial one, Tandem risk alienating their existing customer base by bringing these changes in, especially as there are other targeted options on the market offering cashback, easy access savings and cheaper spending abroad.

That said, it's possible Tandem is tapping into a market that wants all these benefits under one umbrella and are willing to pay for the privilege.

Digital banking

Tandem was one of the first wave of digital banks, obtaining their licence as Tandem Money in 2015 but subsequently relinquishing it following the collapse of planned investment. In 2018 they acquired Harrods Bank and renamed it Tandem Bank, hitting 500,000 customers by January 2019.

Before they officially launched, though, other challengers entered the marketplace with Atom Bank launching their savings account in April 2016 and B, from Clydesdale and Yorkshire Banks (now Virgin Money) launching a month later.

Big names have emerged from the digital bank revolution including Monzo and Starling Bank who are both offering services similar to traditional banks.

On the other hand, some digital providers have fallen by the wayside with Loot going into administration in May 2019 and Fidor announcing they were withdrawing from the UK in July 2019.

Learn more about mobile only banks in our dedicated guide or compare bank accounts using our free comparison tool here.