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A credit card rewards report which allows the consumer to understand the real value of rewards that can be earned from the use of credit card reward schemes goes live today. www.creditcard-rewards.co.uk
The ‘UK Credit Card Rewards Report 2012’, from Loyalty Consulting UK, compares 51 UK credit card reward programmes at three different levels of purchasing behaviour - £2000, £6000 and £12,000 p.a.
Top performers are the AA Rewards Credit Card and Virgin Atlantic Black Duo with the latter rewarding consumers with over £3,000 of flights, for an annual spend of £12,000.
70% of the cards evaluated gave a reward of less than £20 in value for £2,000 of purchases. If used exclusively outside of Sainsbury’s stores (including their online store) the Sainsbury’s Gold Credit Card requires a spend level of £80,000 in order to earn £20 in value (after annual fees). In comparison the Tesco credit card under the same circumstances requires only a £2,000 spend and for the Asda card, an £8,000 spend.
In general, cards provided by Financial Services suppliers such as retail Banks, American Express etc. deliver a consistent reward level irrespective of where the card is used. However, the overall level of rewards is poorer than that provided by retailers and travel companies.
In the travel sector, the Ryanair card performs reasonably well across all spend levels, rewarding customers with free flights. The financial value appears low because it is a low cost operator but if you use Ryanair frequently, this is a straight forward card with a good level of rewards once converted to flights.
The report focusses solely on rewards and not benefits or card features. A reward is an additional incentive designed to encourage card use e.g. cash back, points, air miles. A benefit is a feature of the credit card product designed to deliver additional services e.g. insurances, low cost balance transfers and interest free periods for new purchases.
Loyalty Consulting UK Managing Director Mark Bergdahl said, “We put this report together because there is no other means of comparing credit card reward schemes to the general public. Most comparison sites focus on the credit card APR or, at best, some other card features that reduce the cost of borrowing for the consumer, such as free balance transfers. While these are useful comparisons we wanted to answer the question ‘Which cards deliver the most rewards?’ The basis of comparison used in the report is cash. We have been careful to calculate the value of rewards as fairly and consistently as possible. Loyalty Consulting UK are responsible for the design and implementation of some of the leading reward schemes around the world. As leaders in our field of expertise, the results of this report come as no surprise to us. It is more than obvious that some reward schemes are focussed on attracting new customers at the expense of a longer term customer relationship. When you take a close look at some of the schemes we reviewed, many of them offer very little real value to the customer. “
The comparison of the value of rewards has been made in terms of the equivalent cash rate of return. The report focusses purely on the rewards schemes offered and as such makes no allowance for any servicing fees or interest payments that could easily wipe out any earned reward value. In the full analysis, the report does take into consideration annual fees. Loyalty Consulting suggest that this report be used as a guide only and that the reader should take into consideration all their requirements such as interest rates, additional fees, balance transfer terms and conditions as well as interest free offers.
Industry professionals can view the full set of results by registering on the website www.loyaltyconsulting.co.uk
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