Brits choose credit cards based on incentives

Over half of Britain's credit card users (56 per cent) chose their credit cards based on the incentives on offer from providers, according to research from moneysupermarket.com. Credit cards still play an important role in the nation's finances and reward schemes can be a good way to get some extra bang for your buck.

With a staggering range of incentives on offer, including cash back, air miles and loyalty club points, 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 use 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. Customers must remember however, that any interest charged on the card will always negate the value of the rewards, even on the most generous schemes.

"Anyone thinking about taking out a reward card needs to be disciplined and ensure they are paying off the full balance each month, ideally by a direct debit, to avoid getting stung by interest charges. If you do pay off your balance each month, then interest rates are of little relevance to you. However, if you intend not to repay your debt in full each month then you should avoid reward cards and opt for a card with a lower interest rate instead."