There’s now a £5.99 monthly fee to get existing and new benefits such as 0% interest on all purchases and 1.5% interest on savings.
My top way to pay abroad for the last year or so has been the Tandem credit card. There were no fees and you also earned 0.5% cashback, making it better than alternatives. That cashback also meant it was my backup for any UK retailers where Amex was accepted.
New applications for this card were closed in December 2019, and I’ve just had an email from Tandem that not only outlines the option for new customers, but makes clear that existing customers will lose out if they don’t also sign up for the new Tandem Membership.
What this means for existing Tandem cashback card customers
Existing customers will see their accounts closed on 9th March 2020 if they choose not to switch over to the new membership scheme.
You have until that date to opt into the new membership. If you don’t want to sign up then you don’t need to do anything and Tandem will just terminate your card on that day and pay any outstanding cashback before sending out the final statement.
What is Tandem Membership
Tandem membership replaces the cashback credit card. It still comes with the 0.5% cashback and fee-free spending overseas, but adds in extra features. This all comes at a cost – £5.99 a month. From 9th March 2020, members will get:
- 0.5% cashback in the UK and overseas
- 0% interest on purchases
- Fee-free spending and interest-free cash withdrawals overseas
- 1.5% AER interest on savings (from 9th March 2020)
At the moment it appears to only be available to existing customers, but I’d expect applications to be open to everyone else soon.
Is Tandem Membership worth it?
I’ll take each feature one-by-one to break down the pros and cons, as well as share alternatives.
As I mentioned, the 0.5% cashback has been my backup when American Express isn’t taken. This is the best rate out there on non-Amex cards (where you can get up to 1.25%). It also pays you out in cash to your credit card statement every month. But that £5.99 fee will devour most of the money you make.
The main other non-Amex card to offer a similar rate is the John Lewis Partnership Card. This gives you 1 point for every £1 spent at John Lewis or Waitrose (worth 1%) and 1 point for every £2 spend elsewhere (worth 0.5%). Though the latter rate is the same, bear in mind you only get it on every £2 spent, not every £1 as you do with Tandem. You also have to wait until you have 500 points before you can get a £5 John Lewis voucher. However, there is no fee attached, and right now you can get a bonus £30 voucher if you spend £250 in your first 90 days.
You could also look at the Aqua Reward card which also offers 0.5% back. However the credit limit is likely to be quite low as it’s aimed at people with low credit scores. It also has a cap of £100 cashback in a year.
Overall, if cashback is your reason to get a credit card, I’d go with American Express and John Lewis over the new Tandem Membership.
0% interest on purchases
This might seem like an interesting perk of the membership. There’s no interest on any purchases. However, that’s because you are charged a monthly fee.
Let’s say you have £1,000 on the card at all times. Over the year you’ll have paid £71.88. That’s the equivalent of 7.2%. Now that’s a lot cheaper than most other credit cards and many other forms of borrowing.
But it could also work out far more expensive. Say you only have £100 on there, the rate is closer to 72%. And I could see it contributing to some bad habits. If you’re already paying £5.99 a month regardless of whether you pay off the debt or not, I imagine many people will just leave it there, and potentially let it grow. Not something you should be doing.
You do of course need to make at least the minimum repayment every month, regardless of this 0% interest feature. If you don’t you’ll get charged a £12 late payment fee.
For most people there are far cheaper alternatives. If you’re someone who can and does clear the card balance in full every month you certainly don’t need this as you already don’t pay any interest.
And if you have a credit card debt you should be looking at 0% balance transfers to wipe out interest while you pay down the debt. Similarly, if you have a big purchase on the horizon and want some 0% finance, then you can apply for a separate 0% purchase credit card. All of these options are cheaper than paying the £5.99 fee.
Fee-free spending overseas
I’m a huge fan of these specialist cards which let you pay close to perfect exchange rates without getting hit by some of the extra charges most high street banks throw on top. Tandem will continue to be one of these, adding in no interest on overseas cash withdrawals. However, once again that fee comes into play.
You can get the same offer with other cards, including Halifax’s long-running Clarity Credit card and Starling’s current account.
1.5% interest on savings
This is the best rates out there outside a few current accounts where the balance you can earn money on is limited. However, factor in that fee and you’ll once more wipe out any gains you make. In order to earn that £5.99 every month you’d need to have £4,800 saved in the account – only above this will you actually make any profit.
You’re far better off looking for a savings account without a fee, even if it pays less. Right now you can get 1.4% from Yorkshire Building Society (though there’s only one withdrawal allowed each year) or 1.35% with Marcus.
You could also consider the Santander 123 account at £5 a month which in addition to the 1.5% interest gives you cashback on your bills. However, the cheaper 123 Lite account is only £1, though that only gives the cashback on bills and not any interest.
Though each of these membership benefits are in theory good things, the fact you have to pay £5.99 a month wipes out the money you’ll make and save. Even if you were to use all of these features I’d still say it’s one to avoid as there are free alternatives which offer the same benefit.