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Are you reaping the rewards of your credit card?

A stack of reward and cashback credit cards

Credit cards offered by retailers are more popular than ever – but who benefits most from the loyalty scheme incentives attached to them? Is it you, or is it the retailer who’s reeling in the customers?

Many people base their choice of credit card on whether it offers a reward or cashback scheme. In fact, in our most recent survey, over a third of people said it was the main factor they considered when choosing their credit card.

At first glance, the benefits of a reward-linked credit card seem like a no-brainer – the provider gives its customers an opportunity to earn vouchers when they remain loyal to their brand. However, if you look a little bit closer, it seems some of these loyalty-scheme rewards may not be offering great value.

Every little helps…..

The Tesco Bank credit card is the third most widely-held among Which? members. However, I think their reward scheme offers a low rate of return when compared to other deals.

By using the Tesco Clubcard credit card (which doubles up as a standard Clubcard), you’ll receive five reward points for every £4 spent instore. If you were using a Clubcard on its own, you would receive four points for every £4 spent. Therefore, as 250 reward points is worth £2.50 in Tesco credit, the added benefit of holding the credit card equates to a cashback rate of just 0.25%.

Let’s compare that to a more generous reward scheme, such as the one from Debenhams which lets you earn three points for every £1 spent instore. Based on a redemption value of 500 points per £5 reward voucher, this works out as a 3% cashback rate on instore purchases, compared to Tesco’s 0.25%.

It makes me wonder – are peoples’ choice of reward scheme reflecting their shopping habits instead of the comparative value of the scheme?

Why don’t people prefer cashback?

I find it baffling that cashback cards don’t seem to be as popular as their reward card counterparts. After all, with a decent cashback card, you aren’t restricted to where you spend your money, or where you spend the cashback once you’ve earned it.

That being said, some loyalty point schemes do represent good value when you take advantage of their special offers. For example, Sainsbury’s Nectar scheme or Tesco’s Clubcard scheme regularly offer to double or triple the value of your points if you spend them on selected items or in specific departments. Of course, that’s only really useful if you want to buy something included in the offer.

Do you have a credit card that’s linked to a reward scheme? Do you think you get good value for money, or do they benefit the retailer more than you in the long-run?

Steamdrivenandy says:
29 January 2013

We’ve just taken out a pair of Laura Ashley cards to initially fund the purchase of about £4,000 of their products. We got £5 vouchers each for taking the cards, plus triple points on the purchases which adds up to £250 or 6.25% off. If we’d used our usual John Lewis card to pay we’d have received 0.5% or £20 back. We think that was a good deal and the bill will be paid in full with no interest when the statement arrives. We realise that we’ll be getting vouchers, not cash back but they’ll fund some smaller purchases we know are coming up.

However in principle I don’t like Laura Ashleys marketing policy of listing goods at high prices and then offering varying discounts all through the year. I’d much rather a standard lower price all the time. That may be boring and unsexy and would probably put sheds of marketing wonks out of work but that could save the business money.

richard says:
29 January 2013

As far as I’m concerned – I have a Nectar Card – because two companies I have used for decades because I LIKE their products decided to issue Nectar Cards – Every so often the points accrued allow me to have a complete weekly shop that I would have had to pay for anyway – ABSOLUTELY FREE – It has nothing whatsoever to do with special offers – special discounts – special whatevers. BUT all to do with the quality of the products sold by the companies concerned. The points awarded are immaterial as I would shop there with or without the Nectar Card – But I would be an idiot if I didn’t use the Nectar card to gain those extra points that give me a weeks FREE shopping. I am in line for a FREE weeks shopping in a week or two.

I’m sure M&S and Tesco are getting more from me having their credit cards than I’m getting back. But both were taken out due to the long interest free period on purchases at a time when this was helpful (one when getting married, the other when buying a flat).

As a great lover of M&S I like the quarterly vouchers. As my husband also has an M&S card we do quiet well out of it. Whether it’s good value or not I’m not so sure. But we will spend M&S vouchers, whereas we might not spend in other stores.

The Tesco card we get less from, mainly cos it’s still not reached the end of the interest free period. Having said that, I have just converted £25 of Clubcard points into £50 train vouchers, and most of that £25 was from credit card clubcard vouchers.

I would have probably gone for Sainsbury’s over Tesco, but Tesco had the longer interest free period. Plus Sainsbury’s had previously declined me when my credit rating was shot to pieces after changing my name after the wedding.

As for a cashback card – while I like the idea of cashback, I’ve not seen many with long interest free periods when I’ve taken them out. This was my main criteria for getting the card in the first place, and now I don’t want more than 2 card. Also, the vouchers feel like a little treat 😉

I have to buy groceries week in, week out so why not get the something back on them. Play Tesco Clubcard for all its worth eg join the associated clubs for extra vouchers. Never redeem your points in store and always use them to get the ‘rewards’, better still wait until they do a special promotion on the reward you’re after. I wait until they do a 50% extra points promotion for Avios and with a year’s shopping I easily trade in my points for our family of four’s holiday flights to Europe each year.


You should get a Tesco Credit Card and use it for everything, but pay it off each month. By converting to Air Miles and now Avios we have been to Boston, New York, Thailand and many places in Europe. We also had a fully inclusive hoilday last year. Due to my high usage they also gave 1000 points last month.Tesco Wine offer many deals such as 500 points for a purchase. The trick is not to buy for several weeks and then they tempt you back with extra points. If you are crafty you can get loads of extra points.