Points don’t always win prizes when it comes to credit cards

Spending on a credit card in order to collect points is no longer as rewarding as it used to be – and not all cards are as rewarding as they may seem.

A points scheme is useful for those who want to gain a little extra by turning the points into vouchers or other rewards, but sometimes these rewards can take a long time and a significant spend to add up to anything worthwhile. In addition, some cards will charge higher rates of interest on purchases than could be achieved elsewhere, so if shoppers are not careful, the interest could outweigh any benefits.

In fact, new research by Moneyfacts.co.uk reveals why consumers need to make the most of point schemes, or they might end up wasting their cash on unnecessary interest, and get very little reward. Some cards pay very few points depending on spend and some charge interest of up to 29.9% APR, all of which should be taken into account.

Selection of points cards Max points earned on £100* Min points earned on £100* Purchase APR
Barclaycard Freedom Rewards Visa 200 points (Two points per £1 at selected Freedom partners and UK supermarkets/petrol stations) 100 points (One point per £1 elsewhere) 21.9%
Debenhams MasterCard 300 points (Three points per £1 in store) 50 points (One point per £2 elsewhere) 24.9%
Evans MasterCard 200 points (Two points per £1 in store/Arcadia stores) 100 points (One point per £1 elsewhere) 29.9%
M&S Bank MasterCard 100 points (One point per £1 at M&S) 20 points (One point per £5 elsewhere) 18.9%
Sainsbury’s Bank Nectar Low Rate Credit Card MasterCard 200 points (Two points per £1 at Sainsbury’s stores/petrol stations) 20 points (One point per £5 elsewhere) 9.9%
Tesco Bank Clubcard Credit Card with Low APR MasterCard 125 points (Five points for every £4 at Tesco stores/petrol stations) 12.5 points (One point per £8 elsewhere) 5.9%
TSB Avios Amex/MasterCard 100 points (One point for almost every £1 using Amex) 20 points (One point per £5 using MasterCard) 17.9%
*Points earned do not include introductory offers/points.

Rachel Springall,  finance expert at Moneyfacts.co.uk, says: “The reason most shoppers take out a credit card with a points or reward scheme in the first place is so they can earn something back each time they spend. Sadly, some cards will build up hardly any points depending on how they are used, so some shoppers may rightly feel their credit card has become a bit pointless.

“Since the EU interchange fee ruling last year, cards with rewards have become far less fruitful, and providers have had to assess how they can recoup their costs. They could add card fees, but one of the easiest options is to limit the rewards that they are prepared to offer, by for instance cutting down on points, and findings show this is exactly what many have done.

“One of the providers to change its scheme was Tesco Bank, which has dropped the points offered on non-Tesco spending from one point per £4 to one point per £8, which means £100 now earns just 12.5 points instead of 25 points. Thankfully they’ve maintained the offer for loyal Tesco shoppers, who can still earn 125 points per £100, and they continue to offer a card with a low rate of 5.9% APR.

“There are plenty of high street shops that offer credit cards for shoppers so they can earn vouchers by accumulating points, but some customers could be paying the price for these incentives. As an example, cards from Burtons, Evans, Dorothy Perkins, Outfit and Wallis charge 29.9% APR on purchases. These specific cards may pay 2 points for every £1 spent in store, but elsewhere they pay just 1 point on £1. In addition, consumers need to rack up 500 points to get a £5 voucher, which could mean spending up to £500 on the card, at an interest rate that is certainly more than the 1% they might gain in vouchers.

“Debenhams and House of Fraser might pay 3 points to every £1 spent in store, but elsewhere they only pay 1 point to every £2, meaning customers would need to spend £1,000 away from those stores to qualify for 500 points to get a £5 voucher.

“Frequent flyers can use their credit card to accumulate flyer miles, but once again, depending on use, customers might have to spend significant sums to build up enough air miles for a flight. For example, TSB offers an Avios Amex and MasterCard, but the points vary considerably depending on which card you choose. Using the Amex card will net one point per £1, while customers will need to spend £5 to earn just one point using the MasterCard. This means that shoppers would need to spend £400 more on the MasterCard to earn the same 100 points that they would have earned on the Amex. It does however offer a very appealing 5% cashback which could compensate for the fewer points per spend.

“All in all, it seems that shoppers will have to be savvy in how they spend if they want to make the most of their reward scheme, and they must make sure to repay their debt on time so the interest doesn’t erode any benefits gained.”


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