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Research Reveals The Rise Of Credit Card Reward Schemes

07 March 2012

Research(1) from Sainsbury’s Finance reveals that 42.3% of credit cards now offer some form of reward incentive, compared to 27.4% two years ago. In terms of what form these rewards take, 22% offer cashback, and 68% provide a points or voucher system.  The remaining 10% offer Air miles.

Sainsbury’s Finance, which offers a range of credit cards including two that provide double Nectar points on Sainsbury’s shopping and fuel(2), welcomes the findings which demonstrate a real shift towards rewarding the consumer for their loyalty.

However, the findings reveal that the financial value of these rewards can vary dramatically and it is urging would-be card holders to select their credit cards wisely. Looking at cashback deals for example, on an annual spend of £6,000, the average reward is just 0.77%; only 27.2% of the cash back deals available pay 1% or more.

The Sainsbury’s Finance double Nectar point reward, available on the Sainsbury’s Nectar Credit Card and Sainsbury’s Gold Credit Card, offers the equivalent of an extra 1% off your Sainsbury’s shopping when used in conjunction with a Nectar card, the total combined reward is therefore equivalent to 2% off.

Given the proliferation of credit cards with reward schemes, new research(3) from Sainsbury’s Finance reveals that 55% of credit card holders now claim to be rewarded for using their plastic.  Indeed, 24.5% of people planning to take out a new credit card over the next 12 months are doing so because they want to be better rewarded for using their card. A further 4.5% will be taking out a new credit card because their existing one has removed or reduced its existing rewards scheme.

 

Type of reward received for using your credit card Percentage of credit card holders who receive this (3)
Cashback and points 31%
Vouchers 13%
Aimiles/flight 9%
Another type of reward 4%
No reward 34%

 

Stuart McKeggie, Head of Sainsbury’s Credit Cards said: “As the cost of living increases, people are increasingly looking to get more for their money and also be rewarded for being loyal customers.  This is particularly true with credit cards, where people want rewards for using them. In addition to other attractive features, our Nectar Credit Card and Gold Card both offer a double Nectar card proposition on Sainsbury’s shopping in-store, online and at Sainsbury’s forecourts, which is equivalent to 1% off their shop.

“However, the financial value of rewards is worthless if it is difficult to redeem them.  With Nectar, you can save up your points and use them to reduce the cost of your Sainsbury’s shopping, or use them at other outlets where they are accepted.”

Sainsbury’s Finance offers a range of credit cards that reward shoppers with double Nectar points on all their Sainsbury’s shopping and fuel including the Sainsbury’s Nectar Credit Card(4) which offers 0% for 15 months on balance transfers (3% fee) and 0% for six months on all purchases(5). For those who travel abroad, the Sainsbury’s Gold Credit Card includes rewards such as double Nectar points on Sainsbury’s shopping and fuel, and has a number of additional benefits, including annual family worldwide travel insurance(6), no foreign exchange fees and free cash withdrawals(7). The card carries a £5 monthly fee and a typical APR representative of 20.1% variable.

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For further information, please contact:
Ian Morris / Tom Wilson
Citigate Dewe Rogerson
020 7282 1037/1072

Notes to editors:

(1) Sainsbury’s Finance commissioned Moneynet to research the UK credit card market on 13th October 2011.
(2) Terms and conditions apply, seewww.sainsburysfinance.co.uk for full details. Points are not available on a limited range of Sainsbury’s goods and services – see in-store or sainsburys.co.uk/nectar for details Double Nectar points on Sainsbury’s shopping for two years when you pay with your Sainsbury’s Nectar Credit Card (and hand over your Nectar card). Collect Nectar points when you use your Sainsbury’s Nectar Credit Card elsewhere – 1 point for every £5 you spend. Visit www.nectar.com for more details.
(3) ICM interviewed a random sample of 2004 adults aged 18+. The interviews were conducted via an online omnibus survey between 12th –13th October 2011.  Surveys were conducted across Great Britain and the results have been weighted to the profile of all adults.  ICM is a member of the British Polling Council and abides by its rules. Further information available atwww.icmresearch.co.uk
(4) New customers only. For full terms and conditions seewww.sainsburysfinance.co.uk
(5) Representative example: Purchase rate is 16.94% p.a. variable, with a representative 16.9% APR variable based on borrowing £1,200 and repaying over 12 months. To keep the promotional rate you must pay at least the minimum payment by the due date and stay within your credit limit.
(6) Worldwide travel insurance covers up to two adults and six children including travel to the USA, Personal Baggage, Winter Sports and Independent Traveller cover. Travel insurance policy is worth up to £250. No foreign exchange fees apply, assuming balance is paid in full and on time (46 days – interest rate reverts to 24.9% pa variable).
(7) Assuming balance is paid in full and on time (46 days – interest rate reverts to 24.9% pa variable) For full information on the Sainsbury’s Gold Credit Card and its benefits visitwww.sainsburysfinance.co.uk

Sainsbury’s Finance:

To view our latest press releases and product information, please visit the Sainsbury’s Finance online media centre atwww.sainsburysfinance.co.uk/media.

Sainsbury’s was the first major British supermarket to open a bank, commencing trading in February 1997. Benefiting from a fantastic, trusted brand that enables us to combine the shopping experience with personal finance, Sainsbury’s Finance provides a range of quality products including insurances, credit cards, savings and loans. Our proposition is to make shopping more rewarding by offering customers great products at fair prices, while consistently rewarding shoppers for their loyalty and being easy to do business with at all times.  Our products consistently top Best Buy tables and regularly win awards for quality, price and service.

Sainsbury’s Finance recent awards include Best Overall Online Provider, Best Online Pet Insurance Provider, Best Online Personal Loan Provider and Best Direct Home Insurance Provider at the Your Money Awards 2011. It was also named Most Competitive Term Assurance Direct Provider at the Moneyfacts Awards 2011.

Sainsbury’s Finance is a joint venture between J.Sainsbury plc and Lloyds Banking Group. For further information and general Sainsbury’s Finance enquiries customers can call the freephone number on 0500 40 50 60 or visitwww.sainsburysfinance.co.uk