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Are you making the most of your loyalty cards?

Are you making the most of your loyalty cards?

Category: Savings

Updated: 01/05/2014
First Published: 11/11/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

My wallet is a card jungle. Whenever I go to pay for something I have to hunt for my debit card through loyalty card upon loyalty card. In fact, they far outnumber my credit and bank cards: there's one for my local supermarket, my chemist, my favourite computer games retailer, my taxidermist…

Now I use all of my loyalty cards and their benefits regularly (well, I use the taxidermist card far less since the credit crunch – at present I mainly use that loyalty card for scraping ice off my car), but how do you use yours?

Recent research from YouGov has revealed that 86% of us use our loyalty cards regularly, but 50% think it's a waste of time collecting points! Setting aside the obvious for one minute – why are you collecting points if you think it's a waste of time?! – this raises a valid question, what is the value of using a loyalty card? Is it worth it?

Why are we offered loyalty cards?

"Out of the goodness of the retailer's heart"… Err, no, loyalty cards are a way that big retailers use to monitor our spending and to then target us to spend more. We are rewarded for making purchases by collecting points which, at intervals, are converted into vouchers that we can spend at the store.

Top tips for using your loyalty cards

  • If you know you're never going to use any rewards you get from using a loyalty card, don't sign up (unless of course you're after a new ice scraper…).
  • Only sign up to loyalty schemes at stores you use regularly, or spend significant amounts with. Besides the unwanted plastic you'll end up carrying around, every time you sign up to a different loyalty card, that retailer gets personal information from you – that means post, emails and a whole manner of marketing gumpf.
  • Do you want your details shared with third parties? Be sure to read the application form carefully, and tick any boxes where you don't want your details shared. Already got a loyalty card?
  • You can still change your preferences. Use it! Make sure you use your loyalty card for every purchase you make.
  • Use it! The whole benefit to you of using your loyalty card is to receive vouchers back. There are two types of voucher that you may receive, the first is a money off voucher, this will require you to spend money on an item (although less than you would if you bought the item in store without the voucher) and will usually be targeted around items you have recently purchased. The other type of voucher is a straight cash voucher for you to use in-store on whatever goods you choose to buy. The thing to say here is – make sure you spend your cash vouchers, but only use money off vouchers for goods you would have bought anyway – remember, the aim of a loyalty card is to get you to spend more!

The Loyalty Card Credit Card

Some of the bigger loyalty card brands now offer you the opportunity to combine your loyalty card with a credit card. This will allow you to earn loyalty points wherever you spend (but at a much lower level than if you spend in the stores that the loyalty scheme originates from).

In order to maximise the benefits from these kinds of cards you need to be able to clear the balance in full each month. If you can't, any benefit you gain from loyalty points is going to be wiped out by the interest you will have to pay (unless this is in an introductory purchase period where you will need to clear the balance before the deal ends). If you don't think you would be able to clear the balance in time, a long 0% purchase deal card would be more suitable.

However, the loyalty card credit card may not reward you as well as you might think. Let's compare some of the top loyalty card credit cards against the top-paying cashback cards currently on offer. For the purposes of this comparison we're only including the points received for purchases made at stores other than the loyalty card's "home" stores.


Points/Cashback offer (excluding goods purchased in the loyalty card's "home" store)

Actual value of Points/Cashback on £1,000 spent on card

Sainsbury's Finance Nectar Credit Card MasterCard

1 point for every £5 spent (500 points = £2.50 to spend*)


Tesco Clubcard Credit Card MasterCard

1 point for every £4 spent

(1 point = £0.01 to spend*)


John Lewis and Waitrose Partnership MasterCard

1 point for every £2 spent

(1 point = £0.01 to spend*)


Capital One Bank World MasterCard

1.00% cashback plus a bonus £10 cash back each January


American Express Platinum Cashback Card

5.00% cashback for purchases made in first 3 months

After first three months 0.50% cashback on purchases

£50 for purchases made in first three months (or £5 if you made the purchase outside of this introductory offer)

* Cash equivalents of loyalty points are only available to spend in participating stores in the form of vouchers.

As you can see the cashback cards give more back to you than the loyalty cards on purchases made out of the loyalty card's stores. And of course cash has the advantage of being able to be used anywhere…

However, I should note that the American Express Platinum Cashback Card is only available if you earn £30,000 or more. Also, the loyalty points cash values are the standard values and do not take into account incentives such as Tesco's "The Big Clubcard Voucher Exchange" where the value of your points go up considerably more if you exchange your vouchers and spend in selected departments.

And, of course, this isn't the full picture with the loyalty card credit card. There is also the spending you do in the stores that are part of the loyalty scheme's group. This is where a loyalty card credit card can come into its own. If you do a lot of your spending at these stores, on credit cards, a loyalty card credit card can still work out as a cheaper alternative than a separate credit card and loyalty card.

Finally, the simple fact of a loyalty card credit card, does not mean that the card will be less or more competitive than other cards. If you are in the market for a new credit card, it's best to assess your new card as you would any other credit card. The Tesco Clubcard Credit Card for instance, currently offers the longest 0% purchase deal, at 13 months – in this context, if you're planning to make big purchases, the loyalty points are simply an added bonus!

Find the best credit card rates - Compare credit cards

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.