Poor returns on credit card reward schemes

The majority of people with loyalty schemes linked to their cards are not claiming their rewards. New research from Sainsbury's Credit Cards reveals that during the last 12 months, some 8.19 million people have collected rewards linked to their credit cards but only 3 million have actually bothered to claim them.

The main reason for not claiming them is that the financial value of these rewards is too small - the view of 42% of people with credit cards offering loyalty schemes. A further 27% said that the redemption process takes too long and one in four (24%) said it was too difficult to redeem the rewards. This poor perception helps explain why 48% of credit card holders have chosen cards that do not have loyalty schemes linked to them.

Donald MacLeod, Head of Cards at Sainsbury's said: "Our research shows that the credit card industry has a lot of work to do if customers are really going to feel that their reward schemes are worth having. There is no point offering them if there is no perceived value or if it is too difficult to redeem the rewards.

We have worked hard to deliver a card which offers a sustainable reward which is easy to redeem. A family spending £100 every week at Sainsbury's on our card would receive £104 worth of Nectar points each year on this expenditure alone".

The Sainsbury's credit card offers Nectar points equivalent to 2% cash-back on Sainsbury's purchases. There is no limit to the amount of points customers can earn and these can be easily redeemed at a Sainsbury's checkout or any other company that is part of the Nectar scheme. Card holders can also receive Nectar points on non Sainsbury's purchases as well.

Research from Sainsbury's Finance reveals that 21.8% of credit cards don't offer a reward scheme. Of those that do, only 17 cards have a cash-back offer, 118 offer shopping rewards and 35 provide a points scheme. Of those cards offering a cash-back deal, on the first £3,000 the average non-introductory rate is 0.62%, and no cards offer over 1% on universal spend.

In terms of the financial value of credit card loyalty schemes, Sainsbury's Finance's research reveals that 35% of people, who have credit cards with a loyalty scheme, claim that the value of their rewards over the past 12 months is under £25 and a further 24% put them at between £26 and £50. Only 40% put the value at over £50.

To find out more about the Sainsbury's credit card, visit sainsburys.co.uk.