Santander withdraw 123 credit card

5 October 2016, 15:16   By Samantha Smith

SANTANDER have withdrawn their popular 123 credit card, becoming the latest in a long line of card providers to cut the rewards they offer.

santander bank branch
Credit: JuliusKielaitis/

In its place are two new cards, one offering a long balance transfer period and promotional purchase rate, the other charging no fees on use abroad.

They've also rebranded their existing "standard" Santander credit Card, renaming it the Everyday credit card.

Existing 123 credit card customers won't be affected by the changes: they'll still be able to earn cash back of up to 3% on purchases.

Disappearing rewards

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In a way it's surprising that Santander have continued to offer the 123 Credit Card for so long, as plenty of other card providers have already slashed or ditched the incentives they offered.

Indeed, when we reported on Tesco's announcement last autumn that they were halving the number of Clubcard points cardholders would earn on out-of-store spending, we commented that Santander were also considering changing their rewards programme.

Shortly afterwards they did make a few small changes - changing the fee for having the card from an annual sum of £24 to a monthly charge of £3, and limiting the amount of cash back new customers could earn in any one month.

At least at that point, the increased cardholder's fee was still offset for the first year if the cardholder also had a Santander 123 current account - but that perk vanished in January this year.

Too costly

Last year's slew of disappearing rewards could be attributed to a cap on the amount card providers could charge in interchange fees, which some predicted would cost the companies up to £2.4 billion.

While most have adjusted to those changes, however, the impact of the Brexit vote in June, and uncertainty over the path negotiations will take - and when exactly they'll begin - has seen a record low Bank of England base rate drop yet further.

While that's helped some customers - notably those looking for new low rate mortgage deals - it's meant that banks have found it increasingly difficult to maintain the kind of advantages we've grown used to seeing on current accounts and credit cards.

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Santander have already announced that as of November, they'll be getting rid of their tiered interest rates for 123 current account holders, offering a flat rate of 1.5% AER on balances up to £20,000.

While citing those low interest rates, and the expectation that they would stay that way for some time, they said that impact was being "compounded by increased costs brought about by changes in the banking industry".

Even with the limit they introduced last September on how much cash back holders could earn, it's possible then, that the Santander 123 credit card is too popular for the bank to be able to afford to continue with it.

The Santander All In One credit card

In its place are two new cards offering different benefits - including cash back of a sort.

The All In One Credit Card costs £3 per month. It's being launched with an introductory purchase rate of 0% for six months, and a standard purchase rate of 15.9% p.a (variable).

Because of the monthly fee, the representative APR is 21.7% (variable).

As the name suggests, this card tries to do everything, offering promotional 0% periods on purchases as well as balance transfers, and it keeps the fee-free use abroad element that Santander brought in for 123 credit card customers at the start of this year.

Note that it does offer cash back with no monthly limit on earnings - but at a flat rate of 0.5% users will need to spend at least £600 per month on it simply to offset the monthly fee.

Zero fees on use abroad

Although the All In One credit card offers fee-free spending abroad, it's the Zero credit card that Santander would like people to think of as their travel card.

As with the recently released Barclaycard Platinum Travel card, there are no transaction or cash handling fees for use abroad, as long as we choose to pay in the local currency.

Unusually, there are also no cash advance fees for use at home either - which Santander say will provide "peace of mind if you do need to use it for emergencies". They do point out, however, that they charge interest on cash advances, and at a rate of 29.9% it really should be only an emergency option.

The other, basic, credit card that Santander offered alongside the flashier 123 credit card has been relaunched, as the Everyday credit card.

The name is about all that's changed, as it still offers 0% interest on purchases and balance transfers for the first 15 months - with no balance transfer fee during that time - and a representative APR of 18.9% (variable).

Neither the Zero nor the Everyday credit cards can be used for contactless payments, although they, and the All In One credit card, can be used with Apple Pay.

All three are also included in Santander's Retailer Offers programme.

Cardholders who sign up to manage their cards online or via mobile can join the scheme within 30 days of activating their new cards.

Once they've done that they'll be sent five one-off welcome offers of between 5% and 25% cash back at Argos, Morrisons, Superdrug, Pizza Hut and Costa; they'll then continue to get up to 15% cash back when they keep using the card at participating retailers.

The offers are nowhere near as useful or everyday as the cash back available with the old Santander 123 credit card, but at least they're available from retailers that most of us will be able to use on a reasonably regular basis.

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