Barclays axes cashback for 100,000s of current account holders - so many should ditch and switch

The shake-up means most account holders are better off ditching Blue Rewards and moving elsewhere to earn cashback or to benefit from switching incentives of up to £150 - see below, as well as our Best Bank Accounts guide, for full details on alternatives.  

What is Barclays Blue Rewards?

It's an optional add-on to Barclays current accounts where you pay a fee but earn cashback depending on what products you have and if you meet other conditions, such as paying in £800 a month and paying out at least two direct debits a month to earn the maximum.

The more Barclays products you have, the more cashback you earn, with awards cumulative. Ie, if you have one other product as well as a current account you earn cashback for that on top of the basic reward simply for having Blue Rewards and meeting the current account conditions. If you have two products you earn two sets of cashback on top of the basic, and so on. 

But remember; NEVER let cashback dictate what products you buy as you may be able to find them cheaper elsewhere, though as we explain below, for many it's worth switching bank anyway to earn rewards.

What can I earn with Barclays Blue Rewards and what's changing?

Both new and existing Blue Rewards customers will see the following changes from 4 April:

• The fee will rise from £4/month to £5/month for ALL Blue Rewards customers.

• Cashback for current account holders who have no other products and meet all the conditions will fall from £7/month to £5/month, creating a net gain of ZERO. 

• Cashback on other products is staying the same except for mortgage holders who will see it drop from £5/month to £3/month. 

Be warned: you can only earn the maximum cashback under Blue Rewards if you have two direct debits set-up. If you currently only have ONE direct debit, your maximum cash reward is £3.50/month, meaning you lose out on 50p/month as the scheme costs £4/month. If this applies to you, your membership will be cancelled in June if you do nothing after being given 60 days notice of the closure from when your fee is taken on 4 April. 

The table below shows how this shake-up impacts the net gain customers earn after the fee:

Anything else I need to know about the changes to Barclays Blue Rewards?

Here is some more info:

• For customers with Barclays' Premier Avios Rewards scheme, this is separate to Blue Rewards and is not impacted by the shake-up. 

• The changes officially came in on 1 March, but, in reality, Barclays won’t debit fees or pay rewards until 4 April as it does so a month in arrears - so you won't notice a difference until then. 

• Barclays says it has written to all Blue Rewards customers and gave them at least two months' notice of the shake-up. It adds that customers can leave at any time penalty-free if they aren't happy. 

• Barclays says Blue Rewards will now include the opportunity for customers to enter prize draws - recent examples include Premier League and Barclays FA Women’s Super League tickets and vouchers for retailers, such as Curry’s and M&S. Barclays has also launched free 1-2-1 'money mentor' sessions to help Blue Rewards users set money goals and budget. 

What are the alternatives to Barclays Blue Rewards?

If earning money from your bank is key, we've rounded-up the top bank account switching deals currently available below (for more info, check our Best Bank Accounts guide). If you'd prefer an account similar to Barclays Blue Rewards that pays cashback, then see our best cashback accounts round-up, though check if you'll earn more in cashback than you would do with a switching bonus.

Alternatively, NatWest and RBS offer accounts with both a £150 bonus to switch AND pay cashback on top. See below for more: 

• First Direct 1st Account is offering newbies who switch £150 plus TOP service (90% of people rated First Direct 'great' in our last poll – the best rating of all banks). You'll need to switch to using the account for your everyday banking and make sure to pay in at least £1,000 within three months of opening the account.

• NatWest Reward and RBS Reward are offering new and existing customers £150 to switch, plus up to £36 a year cashback on top. You can't have had switching cash from NatWest, RBS or Ulster Bank since October 2017, and you must be switching a non-NatWest account if switching to NatWest or a non-RBS account if switching to RBS. 

•  Nationwide FlexDirect is offering existing customers £125 and newbies £100 (though there is a trick to get the full £125 - click on this link for how to do it). You can't have had the bonus before and you must set up two or more direct debits to be eligible.

• Virgin Money M Plus is offering newbies an experience day voucher worth £100, plus 5.02% interest on up to £1,000 for a year. You'll need to open the account online and then within 45 days: switch and pay in £1,000+ to its M Saver account (1% AER variable). You'll also need to use the mobile app and have two direct debits. 

See our Best Bank Accounts guide for the full details, including any minimum pay-ins, direct debits and other measures required to qualify for the bonuses.