Spending can be rewarding if you know how
Four out of ten Brit's (41 per cent) choose their credit cards based on the cash back, rewards or Air Miles on offer from providers, according to research from moneysupermarket.com. Cash back and rewards on credit cards are a great way for people to earn rewards for everyday spending, helping offset some of the rising costs of living.
A separate poll shows 60 per cent of credit card users pay off their bills in full each month. For those paying off their balance in full, switching to a rewards and cashback cards would help them generate greater value.
Kevin Mountford, head of banking at moneysupermarket.com, said: "Over the past couple of months there has been a flurry of cash back and reward credit cards being launched by providers, suggesting many are looking to the rewards sector for growth. Santander recently launched its 123 cash back card, while American Express revamped its Platinum Cash back card. With a staggering range of incentives on offer, including cash back, air miles and loyalty club points, for those who pay off their debt in full each month using cash back and reward cards is a no brainer. Customers should consider how often they will use their card, and which type of reward will be most useful to them to ensure the most benefits."
The Sainsbury's Nectar Card Credit Card has recently re-priced and shapes up well in terms of rate and benefits and will be attractive to anyone shopping at Sainsbury's on a regular basis. It offers zero per cent on balance transfers for 15 months, and zero per cent on purchases for six months. 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.
The AA Reward Plus credit card is more suitable for those people who will spend heavily on fuel each year. As you would expect from The AA, the reward scheme is aimed at drivers but there is a cap of £2,000 on annual fuel spend when the rewards revert to the same as non-petrol transactions.
Kevin Mountford, continues: "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 spending spree 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.
"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."