Research identifies poor returns of credit reward schemes

The majority of people with loyalty schemes linked to their cards are not claiming their rewards. New research(1) from Sainsbury’s Credit Cards reveals that during the last 12 months, some 8.19 million people have collected rewards linked to their credit cards but only 3 million have actually bothered to claim them.

The main reason for not claiming them is that the financial value of these rewards is too small – the view of 42% of people with credit cards offering loyalty schemes. A further 27% said that the redemption process takes too long and one in four (24%) said it was too difficult to redeem the rewards. This poor perception helps explain why 48% of credit card holders have chosen cards that do not have loyalty schemes linked to them.

Reason for not claiming rewards collected from a credit card over the past 12 months Percentage of credit cardholders who have a loyalty scheme linked to their card Number of people
The financial value is too small 42% 5.4 million
I could not be bothered 40% 5.17 million
The redemption process is too long 27% 3.43 million
It was difficult to redeem the rewards 24% 3.04 million
Did not know how to redeem the rewards 23% 2.97 million
Other 11% 1.46 million

Donald MacLeod, Head of Cards at Sainsbury’s said: "Our research shows that the credit card industry has a lot of work to do if customers are really going to feel that their reward schemes are worth having. There is no point offering them if there is no perceived value or if it is too difficult to redeem the rewards."

"We have worked hard to deliver a card which offers a sustainable reward which is easy to redeem. A family spending £100 every week at Sainsbury’s on our card would receive £104 worth of Nectar points each year on this expenditure alone".

The Sainsbury’s credit card offers Nectar points equivalent to 2% cash-back on Sainsbury’s purchases(2). There is no limit to the amount of points customers can earn and these can be easily redeemed at a Sainsbury’s checkout or any other company that is part of the Nectar scheme. Card holders can also receive Nectar points on non Sainsbury’s purchases as well.

Research from Sainsbury’s Finance reveals that 21.8% of credit cards don’t offer a reward scheme(3). Of those that do, only 17 cards have a cash-back offer, 118 offer shopping rewards and 35 provide a points scheme. Of those cards offering a cash-back deal, on the first £3,000 the average non-introductory rate is 0.62%, and no cards offer over 1% on universal spend.

Reward scheme Number of cards offering this in May 2005 Number of cards offering this May 2008
Cash back 43 17
Shopping rewards 66 118
Points scheme 22 35
Airmiles or equivalent 17 14
Other reward 23 67

In terms of the financial value of credit card loyalty schemes, Sainsbury’s Finance’s research reveals that 35% of people, who have credit cards with a loyalty scheme, claim that the value of their rewards over the past 12 months is under £25 and a further 24% put them at between £26 and £50. Only 40% put the value at over £50.

(1)ICM Research interviewed a random sample of 1,014 adults aged 18+ by telephone between 2nd -4th May 2008. Interviews were conducted across the country 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 at
(2)Shop at Sainsbury’s and you could earn a whopping 4 points for every £1 you spend. Pay with your Sainsbury’s Credit Card and collect 2 points for every £1 you spend. Hand over your Nectar card at the same time and collect an additional 2 points for every £1 you spend.
(3)Defaqto analysis (May 2008)

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