Chase restricts cashback in blow for current account customers

Chase Bank will overhaul its popular cashback deal next month, meaning current account customers will only be able to earn money in certain places.

It is another blow for Chase customers, who recently saw the interest rate cut on the Chase Saver account.

From 7 April, customers will only be able to earn 1% cashback on debit card spending across three categories: groceries, everyday transport, and fuel.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Cashback will also be restricted to purchases made in the UK and paid for in pounds sterling. Currently, cashback is paid on any spending in the UK or worldwide.

The announcement is the latest in a long line of changes to the popular Chase bank account over the past few years. The account previously paid 1% cashback and 1% interest, making it a highly attractive option.

In May 2023, it capped the amount you could receive in cashback at £15 a month. Then in March last year, the bank hiked the minimum monthly contribution needed to get the cashback from £500 to £1,500.

In August 2024, it scrapped the 1% interest.

Mark Powys, managing director for daily banking at Chase, stressed that Chase's cashback offer remains “one of the most competitive on the market, enabling customers to earn a little extra on many of the essential things they already buy daily”.

How is Chase’s cashback deal changing?

From 7 April, Chase customers will be restricted to earning cashback on three categories. These are:

• Groceries (supermarkets, grocery stores, miscellaneous food stores, convenience stores and specialty markets. Excludes: alcohol stores, some food delivery services like Deliveroo)
• Everyday transport (local and suburban commuter passenger transportation including ferries, buses including charter/tour buses, National Rail, Eurostar, Edinburgh Trams, Transport for London including topping up Oyster cards. Excludes: taxis)
• Fuel (service stations, petrol pumps and electric vehicle charging points. Excludes: charging points at home)

Cashback can be earned when you pay online or in-store, using your physical debit card or contactless. However, you might not earn cashback if you pay through Curve or Klarna.

The second change is that, also from 7 April, Chase customers will earn cashback only on purchases made in the UK and paid for in sterling. So, you won’t get any cashback if you use your card when travelling abroad.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, tells MoneyWeek that "at a time when interest rates are falling, it’s disappointing to see banks tweak the benefits on current accounts, such as cashback".

She adds: “Those Chase customers who use their debit card on everyday purchases will now need to closely monitor how they use their card if they want to maximise the 1% cashback, which is applied each time they spend. Frequent travellers may also be disappointed to see they will no longer earn cashback on spends outside of the UK."

The bank, which is owned by JPMorgan, says the “new cashback categories align with the typical daily essential spending areas of Chase customers”.

It adds that its cashback offer is “one of the best on the market – with no monthly fee, and a straightforward way of earning cashback each month”.

Customers will continue to earn 1% cashback, which is capped at £15 cashback a month.

The eligibility criteria remain the same: there is no deposit requirement for new customers in their first year of cashback, while existing customers will continue to need to pay in at least £1,500 each month to their Chase accounts. This can include deposits into Chase Saver accounts.

The cashback deal has proved very popular since Chase launched in 2021. The bank now has more than two million UK customers.

Should I switch to a different current account?

If you spend at least £1,500 across groceries, public transport and fuel, you will still earn the same amount of cashback as you do now, as it’s capped at £15. So, the change won’t affect you.

However, if you don’t spend this much on these categories, and you have more spending at places like restaurants, beauty salons and cinemas (which will be excluded from cashback from 7 April), then yes, the changes will affect you.

According to Which?, the highest-paying current account for cashback is Santander Edge. The accounts pay 1% cashback: Santander Edge Up customers can earn up to £30 cashback a month, while Santander Edge is capped at £20.

However, these accounts do come with a monthly fee, of £5 for Edge Up and £3 for Edge.

In contrast, the Chase account does not have a monthly fee.

Springall notes that Santander could be a good option for some people, and it could be worth looking at credit cards that pay cashback too. However, she adds: "As a general comparison, Chase is still offering a competitive return of cashback of up to £15 each month, as it doesn’t charge an account fee and just needs users to put £1,500 into the account each month.”

Powys at Chase points out that as well as the cashback offer, “Chase's current account offers a range of money management features, interest on small change round ups through Chase's round up account, and a competitive-rate easy access savings account”.

The Chase Saver account pays 3% interest. This can be boosted by 1.5% for new customers for the first six months if they open the account within 31 days of joining the bank.

If you are thinking of switching to another bank or building society, make sure you check out the best bank switching offers - you can get up to £175 for moving your current account at the moment.