M&S is to become the latest in a string of credit card providers to cut its reward points offering, more than halving the points you get when spending outside M&S itself later this month.

The change affects the estimated three million who have M&S credit cards, but not M&S Bank current account customers. See our Credit Card Rewards guide for more information on such schemes and the best buys.

Like other providers to make similar cuts to reward schemes recently, M&S blames its move on the EU cap – brought in at the end of last year – on so-called 'interchange fees', which card firms charge retailers.

Huge M&S points cull revealed

Here's what's happening from 29 February.

  • All M&S credit card customers will get one point per £5 of non-M&S spending, down from one point per £2 now. This means a £100 transaction will give you 20 points, compared with 50 now.
  • Points earned on M&S purchases won't change. Cardholders get one point for every £1 spent, meaning a £100 spend in M&S would give you 100 points – worth £1.
  • M&S says no other terms and conditions are changing, and you can continue to use your card in the same way. Reward points are automatically converted into M&S vouchers at the rate of 1p per point, and sent to customers each quarter.

An M&S spokesperson says the firm's making the changes "following the introduction of new legislation in December 2015, which affected all UK card providers."

Other reward schemes also slashed

Tesco, RBS and Capital One have also recently scaled back their reward schemes, saying it was a result of the EU cap on interchange fees. Here's more detail on their changes:

  • Tesco credit card-holders saw points on non-Tesco spending slashed to one point per £8 spent (down from one point per £2 or £4 depending on the card held) from 1 Dec 2015.
  • RBS ended its YourPoints reward scheme on 1 July 2015.
  • Capital One cardholders have had cashback scrapped from 1 June 2015.

What are interchange fees and why do they affect cashback cards?

Retailers pay interchange fees, as they are known in the industry, to card firms when customers use a card. They used to be around 8p per transaction for debit card payments and around 0.8% of the transaction for credit card payments.

In March 2015, MEPs voted in favour of bringing in a cap of 0.2% of the value of transactions on debit cards and 0.3% of the value of transactions on credit cards. This came in on 9 Dec 2015. See the EU agrees card charges shake-up MSE News story for more information.

M&S to slash credit card points in latest rewards scheme cutback
M&S to slash credit card reward points

However because card firms are now getting less from retailers, many are reducing the benefits they offer consumers – something MoneySavingExpert.com predicted would result from the new rules.

For further details see our Cashback Credit Cards and Credit Card Rewards guides. Just remember to always repay IN FULL each month or interest will dwarf the rewards earned.