Barclaycard has announced the launch of a new rewards scheme that it claims will be the “broadest retail rewards scheme” ever offered in the UK.
The loyalty scheme, which is currently being trialed in Northampton, will be offered to the provider’s eight million customers from March. Called Barclaycard Freedom, the scheme will allow cardholders to earn ‘reward money’, or cashback, as they shop using their Barclaycard without the need to register to build up points.
Although customers will only be able to earn and redeem cashback through participating retailers, they will automatically earn 1% cashback on most transactions within eligible stores.
The next time they use their card in a participating retailer they will see the value of their reward money balance appear on the card machine before they enter their PIN to pay. Customers can either choose to redeem some or all of this, or save it up for a future purchase at another retailer within the scheme.
More than 30,000 retailers have been invited to join the scheme – making it a rewards coalition of “unprecedented size and scope”, according to Barclaycard. It calculates that customers will have an average of 200 participating retailers within five miles of their homes.
"The breadth of Barclaycard Freedom offers customers the chance to earn reward money when they do their weekly shop, go out for a meal or shop online,” says the schemes managing director, Sarah Newman.
However, Martyn Saville, credit card expert at Which?, urges customers to compare other reward offers on the market before signing up to Barclaycard Freedom.
He adds: 'If enough retailers sign up, this simplified reward scheme could revolutionise the cashback credit card market. Most cashback cards offer around 0.5% cashback, often with strings attached.
"If Barclaycard can offer 1% cashback, available to redeem immediately in a wide range of local shops, they could easily corner the rewards market with this new offer.”
Most importantly, it really only makes sense to use a cashback credit card if you are able to pay off your balance in full each month during the interest free period. Otherwise the interest charges will offset any cashback you have earned.