Capital One ends credit card perks
Credit card provider Capital One has removed its reward cards from sale following a law which passed in Brussels to restrict the profits companies can make.
According to the Telegraph, more than nine million people use reward cards to earn air miles, bonuses or discounts on purchases. American Express, Barclaycard, Santander, M&S are among some of the larger providers.
However, Capital One said its cards, which rewarded customers up to 5p for every £1 spent, were "no longer sustainable".
For current customers, from June 1 the amount they earn from their cards will be lower.
The move by Capital One came in response to new EU rules, which take effect from October, to limit how much card issuers can charge retailers when consumers use their credit or debit cards.
Currently, retailers in Britain pay around nine pence when a customer uses a debit card and while credit card fees stand much higher, at 0.7 per cent of the purchase price.
The revenue this generated for card companies fuelled reward schemes.
However, new rules restrict charges to 0.3 per cent on credit cards and 0.2 per cent on debit cards.
According to come estimations, this could amount to £2.4bn in losses for card companies and ended reward schemes seems to the first point of call to clawing back savings.
Capital One said in a stamen: "The implications of significantly lower interchange revenue has also meant Capital One has had to review its cashback and rewards products for existing customers, several of which are no longer sustainable under current market conditions. We will therefore, reluctantly, be removing or reducing the cashback on these unsustainable products."