Card incentives really do matter
Brits choose a card by rewards
New research in the UK is showing that more than half of the credit card users questioned chose their card because of the reward it offers. This is a major endorsement for loyalty rewards on payment cards.
moneysupermarket.com says that credit cards still play an important role in the nation’s finances and reward schemes can be a good way for consumers to earn something extra. They include zero interest introductory offers and balance transfers as rewards.
The consumer website says that a staggering range of incentives is on offer, including cash back, air miles and loyalty club points which makes working out which card to choose can be a daunting experience for consumers. Matters are made more confusing by the range of introductory zero per cent APR periods now on offer from many providers, either on balance transfers or purchases. Customers should consider how often they will use their card, and which type of reward will be most useful to them.
For example, The Sainsbury’s Nectar Card Credit Card, at 12.9 per cent APR, shapes up well in terms of rate and benefits and will be attractive to anyone shopping at Sainsbury’s on a regular basis. In addition for the first two years, card holders will get double Nectar points on their shopping when spending in Sainsbury’s stores and petrol stations as well as online.
Kevin Mountford, head of banking at moneysupermarket.com, said: “With each scheme offering its customers something unique, consumers need to work out what sort of rewards suit their personal circumstances and shop around for the best deal. For a shopaholic this might be a product that offers them money off their next purchase, whereas a jetsetter might be better off with a card that allows them to accrue air miles. Think about how and where you are likely to use the card before you apply. Many schemes are tied in to certain retailers and purchase types, and if you don’t use them regularly in the right place your card will turn into a white elephant.”
The BMI Credit Card from American Express offers 20,000 destination air miles to customers spending £250 or more within the first 90 days of opening their account. This is equates to two BMI return flights to a range of destinations including Cologne, Amsterdam or Dublin.
Kevin Mountford said: “We have seen many reward schemes come and go over the past couple of years and the market has become used to a high frequency of product changes. That said, reward schemes can still be a great way to generate some extra value from your provider.