Money: What is free cash worth?
Money-back offers are the latest credit card loyalty perk. Isabel Berwick asks if customers will notice the difference
Sunday 24 May 1998
That's how much you'll have to spend on your Barclaycard to buy a toaster worth about pounds 22. Unsurprisingly, Barclaycard's loyalty points scheme comes near the bottom of this month's Which? magazine survey of the perks offered with credit cards.
Despite this less than generous points scheme and an interest rate (22.9 per cent APR) which is never going to make the best-buy tables, Barclaycard still issues 29 per cent of all UK credit cards. But many customers are starting to get picky about their loyalty points. They want to spend their rewards on something useful.
The massive success of the Goldfish card, offering money-off vouchers for shops including Boots and Marks & Spencer as well as your gas bill, has proved that cash is still king, even when you are using plastic. There are 700,000 Goldfish cards in circulation and a growing number of firms signing up to the voucher scheme. Half the Goldfish customers who have redeemed their points so far have chosen to knock money off their gas bills.
Some card issuers have cut out the voucher stage and are just giving money back to their customers. It's an American idea first copied in the UK by Alliance & Leicester last year. It is such a successful gimmick that American Express has decided to launch a mass market moneyback card: a major advertising campaign for the Blue Card starts tomorrow.
Debra Davies, head of credit cards at American Express, says the firm's research showed that customers want easy-to-understand perks from credit cards. The Amex Blue Card offers 1 per cent cash back on everything you spend, so spending pounds 1,000 on the card would earn you a pounds 10 credit. There'll be a special offer in November, when cardholders will get back 5 per cent of what they spend. The interest rate is 9.9 per cent for six months, as it is for transferred balances from other cards: it then rises to 19.5 per cent.
There are only two other cards offering to repay you cash: Alliance & Leicester and Birmingham Midshires. The Alliance & Leicester paid out pounds 4.6m in cashbacks last year. The card offers 0.5 per cent back on everything you spend up to pounds 3,000, and 1 per cent for everything on top of that. Cardholders also get double points whenever they use the card in a range of stores. The APR is 17.9 per cent.
A&L's Geoff Seymour says that the average payout last year was pounds 50, but some customers built up rebates of pounds 400 by using the card to pay for almost every purchase.
Birmingham Midshires' card is much less attractive, only offering a miserly 0.33 per cent cash back on the first pounds 3,000 you spend. The APR is 10.9 per cent for the first six months after the card is issued, then going up to 19.9 per cent.
At first glance the Amex Blue Card looks better than the existing deals, but comparisons are not straightforward. The biggest drawback of any American Express product is that you can only use it in businesses that accept Amex cards. American Express runs its own payment network rather than being part of the Visa and Mastercard schemes. If you own a Visa card you can use it in 14 million outlets worldwide, while Mastercard is accepted in 13 million places. American Express users are restricted to 4 million outlets.
Second, the Blue Card has a pounds 12 annual fee, which means you'll have to spend pounds 1,200 on the card before you've paid off the fee and started to make money from the cash back. And if you want to choose where you spend your rebated cash, A&L is a better bet. The bank sends out cheques once a year, but the Blue Card will credit cardholders' accounts with their rebates once a year, so you have to put the money towards your credit card bill.
If you are a committed Sainsbury's shopper, the supermarket's own Visa card is the best buy among those offering cash rebates or discount vouchers. Sainsbury's offers a range of perks, including a good-value Air Miles collection scheme. When you use the Visa in conjunction with a Reward card in Sainsbury's stores you get a 2 per cent return on your spend. So to get a pounds 2.50 discount off your shopping you'd only have to spend pounds 125 in the supermarket.
There's no point getting excited about a few "free" pounds if you don't pay off your card each month. Anyone who carries a large balance from month to month should be using the cheapest card, which is likely to be a no-frills offer. Capital One is offering 6.99 per cent APR until January next year, then rising to 17.9 per cent.
What do you get from cards offering cash and money-off vouchers?
Card APR% Perks offered Notes
Alliance & Leicester 17.9 0.5%cash back. 1% after Rebate sent as cheque. 1% rebate
Moneyback 0500 868686 you have spent pounds 3,000 + on all cash spent in selected outlets
Amex Blue 9.9 introductory 1% cash back Rebate credited to Amex account.
0800 700111 9.5 standard pounds 12 annual fee
Goldfish 12.9 transfer 1% rebate towards store/bill discounts.
0345 609060 19.8 standard
Sainsbury's 19.7 1% rebate as Reward points Rebate given as money- off shopping in
0500 405060 in Sainsbury's stores. 0.5% stores or vouchers for discounts or extra elsewhere Air Miles
Simon Read: "Pension freedom is months away but if we don't act soon, the freedom may be to make an expensive mistake with our future"
30 January 2015 11:00 PM
The introduction of the new pension freedoms has been "alarmingly chaotic", reckons Nigel Green, chief executive of the financial consultancy deVere Group, He said this week: "The implementation of changes appears to be being rushed in a cynical attempt to woo older voters ahead of May's election."
30 January 2015 09:24 AM
There has been continued criticism of banks' delaying tactics and failure to find those affected by by the UK’s biggest-ever financial mis-selling scandal
26 January 2015 03:29 PM
Companies will be required to ask about health and lifestyle choices or marital status, to protect consumers who do not take up the government’s offer of the Pension Wise guidance guarantee service
23 January 2015 08:00 PM
I had dinner with the pensions minister Steve Webb this week. There was a wide-ranging discussion about the new pensions freedoms starting in April, and changes to the state pension. Crucially, I also got to ask Mr Webb whether he had any plans to have another look at the injustice that is frozen pensions.
23 January 2015 08:00 PM
23 January 2015 08:00 PM
While the health of the economy is not insignificant, Mark Dampier finds it incredibly unpredictable in terms of its impact on the stock market
21 January 2015 12:32 PM
A new free app is aimed at the three-fifths of Brits who have never switched supplier
20 January 2015 09:34 AM
Regulator’s investigation into the market found that around £160bn was held in easy access savings accounts that pay interest lower or equal to BoE base rate
17 January 2015 12:00 AM
Simon Read: Information is power. And it's in the wrong hands when people are cold-called by companies that know they're in debt
17 January 2015 12:00 AM
In debt? You're likely to be targeted by unscrupulous companies that hope to profit from your misfortune. They may try to pretend to be your friend by offering what they call "help" – but almost certainly that help will come with a cost and leave you worse off than you were before they got in touch.
17 January 2015 12:00 AM
In less than three months' time radical changes to pensions will take effect, providing investors with more freedom. Yet for those who prefer to make their own investment decisions, the choice of funds available is overwhelming. And an income drawdown account is also not particularly easy to manage.
15 January 2015 12:23 PM
The minimum amount for which you can be forced into bankruptcy is being raised from £750 to £5,000
Derek Pain: I'm cautious, but remain one of the few bulls in the market
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 3 Ball pool for adults opens in London
- 4 Game of Thrones season 5 trailer: The first full-length look is here
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion