Cashback credit cards are slowly becoming a thing of the past. Nationwide becomes the latest issuer to remove the benefit, and those that remain offer minimal returns.

The decline of the perk indicates that the cash back incentive is not particularly attractive to consumers. With the Nationwide benefit standing at just 0.25%, you'd be receiving just £2.50 for every pound spent.

Nationwide Withdrawal

Nationwide Building Society withdraw its only cashback card to new business on Wednesday last week. In a candid statement, Nationwide explained that cardholders would generally be better off by taking the lower interest rate on its standard product:

"For the average customer the Cash Reward card cashback would equate to just £10 per year. In comparison they would save £20 in interest charges with the Classic credit card over the same period."

The change does not apply to existing cardholders.

How Can Providers Offer Money Back?

Cash back has been used by card issuers to tempt new customers. At first, cards were offering up to 2% for purchases, although all providers have been whittling away at the rates recently.

The move away from cash back has two main causes:

• Card issuers are under increasingly pressure to demonstrate responsible lending. Cash back doesn't help this argument.
• Cardholders are generally more interested in lower interest rates and other benefits, such as interest free balance transfers.

Credit card companies can afford to give the money back because they recoup any costs through higher interest rates and other charges.

This type of card generally benefits cardholders who use it regularly and pay off the balance in full each month. Paying just one month's interest could easily cost more than a whole year's worth of cash back.