Amex cutting rate again: must be better now?

Jeff_t

Ive had an Amex cashback card for years. At one stage I started paying more per year, in order to take advantage of higher cash back rates.
Since then, they have cut back several times: the first cutback brought the rate below what my original card was.
Today I have an email saying they are cutting the rate again, down to 0.75% on the first 10K of purchases.
I dont get how or why they are doing this - the cashback rate is the difference between what they charge retailers and what they give me.
As percentages, nothing about this arrangement has changed - its not affected by Bank of England interest rates, or inflation indices.


To me, a reduction of cashback rate is unjustified  and is a unilateral change to what is a contract between us.

Is there a better cashback rate card out there?

[Deleted User]

They're doing it because there is no point in them giving away more profit that they need to. And as to how they're doing it, it's via a notice of variation.

They would be stupid to be so far ahead of most other offerings.

eskbanker

Jeff_t said:

the cashback rate is the difference between what they charge retailers and what they give me

Not sure about your maths, surely the cashback rate is what they give you, not a difference between that and another figure.

Jeff_t said:

To me, a reduction of cashback rate is unjustified  and is a unilateral change to what is a contract between us.

What does that contract say about their right to make unilateral changes such as varying rates?

billy2shots

Hmm, my rate is being cut to 0.5% until the 4th of August when it will reduce further to 0.25%. 

Typical, just as my rate of spending was going to triple.

jbrassy

When it comes to cashback credit cards, unfortunately there's little competition. Matercard and Visa are constrained by the fact that interchange fees on credit cards are capped at 0.3%, which is what they used to fund cashback. Amex are exempt from this cap. This means you won't find a non-Amex credit card paying more than 0.25% cashback. Therefore, Amex have the ability to cut the rate of cashback they pay consumers and still have the most competitive offering in the market. As someone said above, from their perspective, why should they pay out more than they need to.

It's a shame, but it's not going to change unless the UK Government scraps the interchange fee cap. This is unlikely to happen since the reason it was introduced is because merchants complained there is too little competition between Visa and Mastercard which meant they were able to charge excessive fees. 

Swoosh84

jbrassy said:

When it comes to cashback credit cards, unfortunately there's little competition. Matercard and Visa are constrained by the fact that interchange fees on credit cards are capped at 0.3%, which is what they used to fund cashback. Amex are exempt from this cap. This means you won't find a non-Amex credit card paying more than 0.25% cashback. Therefore, Amex have the ability to cut the rate of cashback they pay consumers and still have the most competitive offering in the market. As someone said above, from their perspective, why should they pay out more than they need to.

It's a shame, but it's not going to change unless the UK Government scraps the interchange fee cap. This is unlikely to happen since the reason it was introduced is because merchants complained there is too little competition between Visa and Mastercard which meant they were able to charge excessive fees. 

Think the cap only applies to EU countries. Sure I read an article that stated mastercard were increasing their fees in the UK from 0.3% to 1.5% for credit cards. Not sure if this has happened yet or will happen in the future when current agreements come to an end.

Might increase reward levels but no doubt increase all our shopping prices by around 1% across the board as companies adjust!

J

eskbanker

Swoosh84 said:

Think the cap only applies to EU countries. Sure I read an article that stated mastercard were increasing their fees in the UK from 0.3% to 1.5% for credit cards. Not sure if this has happened yet or will happen in the future when current agreements come to an end.

That only relates to purchases made by UK customers from merchants in the EU and is due to be introduced in October:

https://moneyfacts.co.uk/news/banking/mastercard-to-increase-european-fees-how-will-this-impact-consumers/

jbrassy

Swoosh84 said:

jbrassy said:

When it comes to cashback credit cards, unfortunately there's little competition. Matercard and Visa are constrained by the fact that interchange fees on credit cards are capped at 0.3%, which is what they used to fund cashback. Amex are exempt from this cap. This means you won't find a non-Amex credit card paying more than 0.25% cashback. Therefore, Amex have the ability to cut the rate of cashback they pay consumers and still have the most competitive offering in the market. As someone said above, from their perspective, why should they pay out more than they need to.

It's a shame, but it's not going to change unless the UK Government scraps the interchange fee cap. This is unlikely to happen since the reason it was introduced is because merchants complained there is too little competition between Visa and Mastercard which meant they were able to charge excessive fees. 

Think the cap only applies to EU countries. Sure I read an article that stated mastercard were increasing their fees in the UK from 0.3% to 1.5% for credit cards. Not sure if this has happened yet or will happen in the future when current agreements come to an end.

Might increase reward levels but no doubt increase all our shopping prices by around 1% across the board as companies adjust!

J

To add: the cap was introduced by the EU, but it was copied and pasted into UK law as part of the Brexit process.