“The addition of a 0% purchase offer for 18 months on the 123 credit card is an interesting move by Santander. Generally speaking we would recommend using two separate cards for borrowing and earning rewards. At first glance, this card is offering the best of both worlds, however it’s only suitable for very disciplined credit card holders. It’s vital that any balance that is built up during the 0% offer period is paid off before it ends, otherwise consumers could find themselves with a large balance on which they’re paying interest. This would quickly erode any cashback gained, creating a bit of a debt trap if not managed properly. Having a separate rewards card and setting up a direct debit to pay if off in full each month is far simpler for most people.
As a standalone cashback credit card Santander is still a good deal for some spending, particularly with the potential to earn up to £9 a month (3%) on transport spend. But beware, you need to keep spending to make up for the £24 fee. For general spending there are better deals out there such as the American Express Platinum Cashback which still tops the table for those spending £1,600 a month, paying 5% cashback for three months followed by 1.25% thereafter on all spending. The TotallyMoney.com cashback calculator shows this will earn consumers £779 cash back in the first three years based on £1,600 being spent every month and a £25 annual fee. This is more than four times the likely £186 earned with the Santander 123 credit card over the same period, taking into account the £24 annual fee. You could earn more with the Santander card if you have a higher than average spend on travel (3% cashback) or department stores (2% cashback). Overall you’d be unlikely to top the Amex deal.”
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