It's of little surprise most stores have cottoned on to the fact customers like being rewarded for their loyalty. It makes us feel valued and will more than likely keep us returning to the shop time and time again. But consumers are suffering from a glut of cards and a constant bombardment of rewards and offers.
A recent poll by discount website myvouchercodes.co.uk found that half of us are missing out on potential rewards by not making use of the loyalty cards from shops we frequent. The study also showed loyalty cardholders generally receive £10 worth of rewards per quarter for each card they hold. But 52% of respondents said they didn't have cards despite shopping at such stores regularly.
Generally, cards reward customers with a number of points for every pound spent, which can then be exchanged for vouchers or discounts but these vary greatly from card to card. As such, it's worth weighing up the best cards, and how to make the most of them. The fact that
more than half of us don't have cards suggests stores aren't doing enough to woo us – or we don't really see the value in loyalty cards.
So what are we missing out on? Mark Pearson, chairman of MyVoucherCodes, says: "Consumers should make it their aim to get as many loyalty cards as they can. If you shop somewhere regularly, or even every now and again, make sure you sign up."
But remember that loyalty cards are not on offer out of the goodness of retailers' hearts – they are carefully calculated schemes to get the most out of each customer, which makes using them well all the more important.
Let your points build up
"There is a knack to using loyalty cards in the best possible way," says Pearson. "If you spend your points almost as quickly as you earn them, you aren't really going to see much benefit or a lot of savings. I'd recommend letting your points build up as long as you can."
For loyalty card virgins or those who leave them festering in their wallet, let's consider the big three cards to find out how your loyalty is rewarded – Tesco Clubcard, Sainsbury's Nectar card and Boots Advantage Card.
First things first, how many points does each card offer?
The Clubcard offers one point for every pound spent across a range of products, from in store and online to more niche departments such as motoring and travel. Tesco fuel will earn you a point for every £2 spent and there are more points on offer for those using a Tesco Clubcard credit card
– 150 points equals a £1.50 voucher, and each £5 voucher equals £20 in reward vouchers that can be used at brands including Pizza Express and Avios, the airmile scheme.
Next up, the Nectar card offers two points for every pound spent, plus a point for every reused bag and a point for every pound spent on petrol. Points can also be collected from companies including Homebase, British Gas and eBay.
With Nectar, 500 points equal £2.50 to spend, and the same figure applies for offers at most companies participating in the scheme, from Bella Italia to easyJet and even Oxfam.
Over at Boots, the Advantage Card returns four points for every pound spent in store, online and at Boots Opticians. Each point is worth a penny and can be spent in store and online. Its Parenting Club also gives families 10 points for every pound spent on baby products.
All three loyalty cards don't allow points to be collected for among others prescription items, infant milk, stamps, tobacco and the lottery.
On the face of it, Boots gives customers the best return on their money, both points-wise and pound-wise. But what do the three offer in terms of extras?
Clubcard points can be used for flights, hotels and package holidays, days out at places such as Alton Towers, and a wide range of brands. Customers will often get more for their points if they use a Tesco Clubcard credit card. Clubcard holders can also take advantage of Tesco's new Clubcard TV offer of free online films and TV, a partnership with online movie company Blinkbox.
With the Clubcard's rewards scheme you can exchange a number of points for different products. For example, £9's worth of points can bag you a 12-month subscription to Moneywise, while £8's worth can be exchanged for a ticket to Madame Tussauds in London. There is a host of other days out and restaurants to use your vouchers on.
The Nectar card boasts the greatest range of companies through which you can earn your points – from Expedia to Homebase – and a similar offering to Tesco for the sort of places you can spend your points, as well as special section where points can be exchanged for magazine subscriptions, meals out and even charitable giving. For example, 5,000 points (£25's worth) will buy you an Oxfam Unwrapped gift of a goat to an impoverished family.
Again, customers will benefit more if they hold a Nectar credit card while businesses can sign up for a Nectar Business credit card and earn points on business expenditure. The Boots Advantage card probably offers the smallest number of outlets for spending your points, though it has an exclusive 'Treat Street', where you can receive one-off offers for a range of shops, such as B&Q and Matalan. However, its standard four points to a pound ratio makes this card a must-have for shoppers.
Whichever cards you use, Pearson warns about being sucked into the false economy of offers. "Loyalty cards may seem like they're 100% for the shopper, but really they are just a sneaky tactic on the retailer's part to make more money," he says. So be wary of offers you don't really need, watch out for impulse buys and don't shop hungry.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.