Credit Card Perks Go Unclaimed

A study published last week revealed that despite thousands of consumers earning monthly reward points through their credit cards, almost two-thirds fail to cash-in these points and collect their rewards.

According to the report, commissioned by Morgan Stanley Banking Group, only 32% of UK credit card holders have actually redeemed points or received cashback in the last three months.

Of those who earn air miles through their card’s loyalty scheme, just 9% have redeemed free entitled flights in the last quarter.

Morgan Stanley’s Goldfish card had the largest amount of reward claimants, with 46% of customers cashing in the past three months. Cashback was claimed by 29% during the same period, with the same number redeeming Nectar rewards via their Amex cards.

Patrick Muir, marketing director for Morgan Stanley Consumer Banking said, “ credit card reward schemes can be a great way for cardholders to be rewarded for everyday spending, but there’s no point in having one if customers do not redeem their points. Savvy spenders should consider how useful the rewards actually are and how easy they are to redeem.”

According to Mr Muir those who want to earn loyalty points at various retailers would be best placed taking out a Goldfish card, although there are many other cards on the market that offer a variety of reward schemes. Some cards will suit depending on one’s spending habits.

For consumers who do not want to be restricted to where they earn their loyalty points, a card offering cashback would be more suitable as they offer a small percentage of the amount spent on the card in cash.

Anyone considering applying for a credit card that offers some sort of loyalty scheme should factor into their research the huge disparity in the average value of rewards offered.

For example, Amex nectar had the lowest value reward redemption - £45 over three months – while Airmiles had the highest at £157. Typically cashback came in at £72 over the last three months, while Goldfish rewards had an average value of £64. These figures should prompt consumers to seriously shop around as reward values can differ significantly.

More and more consumers are now taking into consideration the loyalty schemes offered by UK credit cards when it comes to applying for one, as the interest free deals being offered are in decline. Deals such as 0%interest-free balance transfer4s, for example, are now more and more likely to come with a fee for transferring and a shorter period.

However, consumers wishing to take advantage of loyalty schemes had better hurry as more card providers either scrapping or reducing loyalty schemes, with eight out of ten downgrading loyalty schemes during the last 14 months.

Alisdair Milton
25/4/06

 

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