We’ve been analysing reward credit cards ready for Christmas and have uncovered some real turkeys hidden inside the credit crackers. Have you been disappointed with your reward credit card?
In the run-up to Christmas, many of us will be spending a small fortune in supermarkets. And with so much money going out, a reward credit card from your favourite store sounds like a great way to get a bit of money back. Unfortunately, though, the loyalty you show is unlikely to be reciprocated.
We wish you an unrewarding Christmas
On the plus side, Tesco’s card offers the joint-longest 0% period on new purchases, allowing you to spread the cost of Christmas without paying any interest. And yet, if it’s rewards you’re after, you might be surprised to learn that Tesco’s reward scheme offers just 0.25% – the worst overall deal if you redeem your points in-store.
The others aren’t much better. Sainsbury’s Nectar MasterCard might offer a respectable 1% in-store, but you’ll earn an execrable 0.1% reward elsewhere. The Asda Reward credit card pays 0.5% in-store and just 0.25% elsewhere and, while it offers double rewards for the first three months, maximum annual cashback is just £50.
Even the best reward cards have terms and conditions that could easily trip you up. For example, BHS and House of Fraser rule the high street when it comes to credit card reward rates. And yet, once they’ve sent you your vouchers, you only have three months to use them before they expire.
As several card providers send out vouchers every three months or so, it’s unlikely that you’ll build up massive rewards in any period. Indeed, instead of only spending your £5 voucher, you’ll probably put it towards a more expensive item in-store. The retailer wins every which way.
And an unhappy New Year
And if you don’t pay off your credit card bill every month, get ready for a hefty interest charge. For example, you’ll be paying an interest rate of 19.9% if you take out the reward credit card from BHS, Debenhams or House of Fraser and don’t pay it all off when your bill arrives. After a few months, the interest you’re charged soon wipes out any rewards you’ve earned.
If retailers are going to give with one hand and take with the other, you might be better off with an old-fashioned cashback card instead. Or go old-school and just pay in cash.
How are you paying for Christmas? Have you lost out on rewards due to the way your favourite store’s credit card works?