According to Research on Jupiterglobal consumer credit card rewards will hit $92bn (£71bn) in 2022. And they’re expected to grow 15% a year as consumers opt for programs based on single rewards rather than multiple loyalty apps.
There are a host of credit card rewards to choose from, including cash back, discount vouchers, hotel status upgrades and Avios flights. I’m going to look at some of the most tempting credit card rewards on offer today, along with some other tips for choosing a credit card.
What are the most popular rewards programs?
1. Cash Back Programs
Unsurprisingly, these credit cards give you cash back on your purchases. The refund rate is usually around 5% for the initial promotional period, followed by an ongoing rate of 0.25% to 1.25%.
We’ve compiled a list of our top-rated cashback credit cards to help you compare the different options. The American Express Platinum Cashback Daily Credit Card could be a good option for big spenders, offering 1% back on spending over £10,000 a year (and 0.5% below £10,000). The card also has no annual fee.
An even higher cashback option is the American Express Platinum Cashback Credit Card, offering 0.75% cashback (on spend under £10,000) and 1.25% cashback (on spend over £10,000) ) for an annual fee of £25.
As American Express is not universally accepted, other options include 0.5% cashback on the Santander All In One credit card and 0.25% cashback on the Barclays Rewards credit card.
2. Loyalty programs
A number of credit cards offer vouchers or rewards points, including Tesco, Sainsbury’s, John Lewis and Marks & Spencer.
The M&S Shopping Plus credit card offers one point for every £1 spent at M&S and £5 spent elsewhere. This equates to an equivalent cashback rate of 0.2% to 1.0%, as each point is worth 1 pence in vouchers.
I have a John Lewis partnership credit card which awards five points for every £4 spent at John Lewis and Waitrose and one point for every £4 spent elsewhere. Each point is also worth 1 pence in vouchers, which equates to a redemption rate of 1.25% at John Lewis and Waitrose and 0.25% elsewhere.
3. Avios and hotel rewards programs
American Express offers two credit cards with benefits for British Airways customers. I use a British Airways American Express Premium Plus card for the majority of my expenses. Although it has a fairly high annual fee of £250, I earn 1.5 Avios points for every £1 spent (and three Avios for BA purchases).
For me the main benefit is to earn a companion voucher if I spend more than £10,000 a year. This allows me to book two airmiles flights (in any class) for the price of one.
Alternatively, the Marriott Bonvoy American Express is a hotel rewards card that offers privileges such as an upgrade to Gold Elite status.
Are rewards-based credit cards a good option?
Rewards-based credit cards are best suited for people who are able to pay off their credit card balance in full each month. But it is also worth considering other factors such as annual fees.
Another important consideration is whether you intend to use your credit card abroad. My BA Amex card usually charges a 2.99% ‘non-sterling transaction fee’ when I use the card overseas. If I’m paying for hotels and meals, it can add up.
To avoid this, I also have a Halifax Clarity credit card for foreign currency purchases. There’s no annual fee or exchange fee, but it doesn’t offer any other rewards, so I only use it outside of the UK.
What if you have bad credit?
It can be difficult to apply for a credit card if you have bad credit or no credit. However, we have compiled a list of our top rated credit cards for bad credit to help you out. We’ve also laid out eight tips to help you apply for a credit card, including ways to improve your credit score.
1. Credit cards with balance transfer
If you have unpaid credit card debt, we’ve picked our best balance transfer credit cards. These cards generally offer 0% interest on balance transfers for at least a two-year period. This could give you time to clear your debt without incurring additional interest charges.
2. 0% credit card purchases
These credit cards offer 0% interest on new purchases for an initial period, usually one to two years. They could be an option for people looking to spread the cost of a larger purchase without incurring interest payments. Our experts have researched the market to produce a list of the highest rated 0% spend credit cards.
A wide range of credit cards are offered. If you have no outstanding credit card debt, rewards-based credit cards can be a great way to earn different types of rewards on your daily spending.
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