Wednesday, March 27, 2013, AM | 2 Comments
Reward cards are a great way to rack up the benefits of using credit cards, but only if you pay off your bill, in full, every month. There are a large variety of reward cards on the market today, however not all of these cards offer the same benefits, and if you’re not careful, you could sign up for plastic that offers a fraction of the benefits compared to other market leaders.
Let’s take a look at how to spot the best reward cards, and the worst.
Reward Card Winners
It’s very simple how reward credit cards work – the more you spend with them, the bigger the percentage you get back in points. Many of these points can be redeemed as vouchers or money-off discounts, from flights and holidays to zoo tickets and petrol.
If you’re using a cash-back reward credit card, then these points can be turned into money-off your next bill.
Hundreds of companies in the UK offer store cards to customers, to entice them to get money off thousands of products. One of the best companies to offer a store reward card in the UK is The House of Frasier, as well as British Home Stores.
These retailers are able to offer customers up to 5 per cent of their in-store spending as redeemable points, or cash back. However, like always, there’s a catch. From the date of shipping the rewards card to your address, these rewards are only valid for three months.
Reward Card Losers
When it comes to the UK supermarket industry, there are currently three reward cards offered by Sainsbury’s, Asda and Tesco. The Nectar reward card allows you to redeem only 1 per cent cash back in store, and a shocking 0.1 per cent outside the store.
Asda’s card is even worse, offering customers the chance to redeem just 0.5 per cent in store, and 0.25 per cent outside!
Then there’s Tesco, the UK’s biggest supermarket chain.
You would think they’d lead by example, offering great rewards for the loyalty of their customers.
However the reward cards offered by Tesco will only allow you to redeem just 0.25 per cent of your points in store.
Many in-store reward cards tend to offer introductory low interest rates of purchases, meaning you could pay no interest on your shopping if you always meet the minimum repayment.
It’s always best to check credit card comparison websites if you’re not sure about the benefits and interest rates of store cards.
Rewards VS Cash Back
So, what’s the best type of reward card to have – spending points on the high street, or claiming back the points for cash?
Firstly, reward cards will offer better rates if you spend your hard earned points in store, as this encourages customers to continue shopping with the company.
If you choose to do your shopping at a number of supermarkets however, and have no loyalty to any, then it’s the cash back reward credit card you’ll need.
Although you won’t be able to get the cash back as actual physical money, you will be able to put it towards your next bill.