The Lowdown On Loyalty Schemes

Find out which loyalty schemes deliver the largest rewards.

This article is out of date. For the latest version, please read The top loyalty schemes for shoppers

According to market researchers TNS, around 85% of us have at least one loyalty card in our wallet.

So what is a loyalty card? Well, essentially it's a free card that you can collect from a retailer. Hand it over every time you make a purchase and points will be added to your account. Collect enough points, and you can use them as money off your shopping.

However, a more lucrative method (if available) is to use them to take advantage of one of the many offers available to cardholders. For example, points can be used to pay for tickets to theme parks, DVD rental, dry cleaning, furniture, jewellery or meals out, to name but a few. A large number of retailers now offer loyalty schemes, which can differ greatly in their usefulness.

Of course, we all know these schemes aren't really free -- we pay for them through increased prices in store. For this reason, you may prefer to use shops such as Asda, Lidl and Aldi, which can keep their prices low by not offering a card. Loyalty cardholders are also subject to having their shopping choices analysed by the supermarkets/retailers, which can be quite annoying.

However, if you can put up with this and regularly use a shop offering a loyalty card anyway, you might as well take advantage of it -- after all, you're paying for it anyway! Clever use of the money off shopping vouchers regularly sent out can boost your point totals and reduce the cost of your shopping, too.

Here are some of the loyalty schemes currently on offer:

TescoClubcard

In this scheme you earn 1 point for every pound spent in Tesco. Each point is worth 1p and 150 can be swapped for a £1.50 voucher, which can be spent as cash, in store. This equates to a discount of 1%.

However, a more lucrative method is to swap these vouchers Clubcard Deals vouchers, which are worth 4x their value, meaning that £2.50 becomes £10. By checking the website, you can use Clubcard Deals vouchers as cash to pay for a whole range of offers, including theme park entry, entry to stately homes, holidays, hotel stays, RAC cover and even driving lessons.

For example, one adult and child could visit Hampton Court Palace for just over £5 in Clubcard vouchers -- which would normally cost around £20. And £7.37 in Clubcard vouchers will buy a one day entrance ticket to Alton Towers, which normally costs £29.80.A mere £25 in Clubcard vouchers can buy a Eurostar ticket to Paris, worth £100. And £9.60 will buy you a subscription to Good Housekeeping magazine (worth £38).

Verdict

The Clubcard scheme is widely regarded as one of the better loyalty programmes available; especially if Clubcard deals are used as there is a wide range to take advantage of. Extra point vouchers can also be obtained by signing up to their Food/Baby/Wine/Healthy Living Clubs.

Nectar

The Nectar scheme is made up of a group of retailers, including Sainsbury's and Debenhams. Two points are awarded for every pound spent in store (one point for every pound spent on petrol) and 500 points = £2.50. This equates to a discount of 1%. Points can be used to pay for shopping, but again, it is usually more lucrative to use them to pay for Nectar deals.

For example, 7,000 points (£35) will buy a flight from London to Paris (exc. taxes and surcharges). A DVD can be rented at Blockbuster for 500 points (£2.50) and a trip to Paris on Eurostar would cost 11,000 points (£55). And 12,000 (£60) points can buy an annual pass to the Tussauds group, which gives a year's entry to Alton Towers, Thorpe Park and Chessington World of Adventures, amongst others.

You can also boost your points by purchasing through a much larger number of retailers on the eNectar site.

Verdict

This scheme is not as lucrative as the Tesco scheme, with far fewer deals available. However, if you regularly shop at the Nectar partners you can build up points quite quickly.

WHSmithClubcard

Sign up to the WHSmith Clubcard and you can earn one point per pound spent in store/online -- 100 points = £1 so again, it's effectively a 1% discount. Bonus coupons are often issued offering 300 points if you spend £10 in store, so effectively giving you an extra £3 on the card.

Verdict

Again, worth having if you shop at WHSmith, but don't restrict yourself simply to earn points if the same items can be bought more cheaply, elsewhere.

Co-op Dividend Card

This scheme rewards customers with cash. For every pound spent in-store, 1p is credited to the card and dividend vouchers are mailed out twice a year.

Verdict

A good option if you don't like the idea of earning points (and prefer cash), but it is less lucrative than the others.

Boots Advantage Card

The Boots card offers the most straightforward savings -- you earn 4 points (4p) for every pound spent in-store, equating to a discount of 4%. You can use the points at any time to purchase items in Boots and they often have double or triple point weekends, so if you can save your spending until then you can effectively get 12% of your shopping back as points.

What's more, by using the Advantage card machines in store, you can print out coupons worth extra points (such as 300 points if you spend £30) to boost your total.

Verdict

This is a very lucrative scheme, provided you use it wisely. By saving up your shopping to triple point weekends, printing out vouchers to boost your points further and taking advantage of 3 for 2 offers, you can be quids in.

The Body Shop

This little-known scheme is unusual because the card in this case isn't free. You have to pay £5 for the Love Your Body card, but it does mean that you get 10% off everything you buy in store/online for a year.

When you've made four qualifying purchases you can choose a gift worth up to £5. And when you've made your eighth qualifying purchase you can choose a gift worth up to £10, plus your card will be renewed for free for another year. What's more, if you call into a store in the month of your birthday you will receive a free gift worth up to £5.

Verdict

This card is obviously only worth having if you shop regularly at the Body Shop as it isn't free. Ideally, you need to spend at least £50/year -- this will pay for the card and it means any free gifts are a bonus. By spreading out your purchases you can make sure you gain the entitlement to a free card for the next year, too.

Airmiles

The Airmiles scheme allows you to earn miles to be spent on flights or holidays available from Airmiles. You can also exchange Homebase and Tesco Clubcard vouchers for Airmiles. For example, spend £250 in Tesco and you'll get a £2.50 Clubcard voucher which can be traded in for 60 Airmiles. Spend £50 in Homebase and you'll get a £1 Homebase voucher, which can be traded in for a far meaner 6 Airmiles - 50% less. Other participating retailers include Shell filling stations, Southern Electric and Interflora.

Airmiles also do not have to be used for travel related deals. For example, you can trade 200 points for a ticket to the Tower of London (normally £15) or 370 miles for entry to Legoland (270 for a child) which normally costs £31 and £24 respectively. And 160 miles will buy a ticket for the London Eye, which normally costs £14.45.

However, it's worth noting that, whilst just over 3 Tesco Clubcard vouchers (£7.75) will buy a ticket to Legoland, you'd need to trade in twice as many -- just over 6 (£15.42 = 370 miles) if you were to do it through Airmiles.

Verdict

This can be a good scheme, but again, only if you'd be spending money with the retailers anyway. If you're considering cashing in your Tesco vouchers for miles, do your sums carefully -- and check that you can't get the same deal more cheaply though Tesco.

Earn points elsewhere....

Points can also be earned at partner retailers, too. For example, if Powergen is your supplier, sign up and you'll earn Tesco Clubcard points for every pound spent. Hand over your clubcard at Johnsons when doing your dry cleaning or a Marriott hotel on a business trip and you can earn more points. Nectar cards can be used in BP filling stations, with EDF energy and Dollond & Aitchison opticians, amongst others.

Credit cards

Another way to earn points is to take out related credit cards, but this should only be done with care -- if you won't pay off the balance in full each month, don't bother, as no amount of points are worth accruing interest.

Christmas

Interestingly (and probably in response to the recent Farepak disaster) both Tesco and Sainsbury's now offer cardholders that chance to lock-in their points until November. By not being able to spend their vouchers during the year, shoppers should accrue a good number of points, which can be used to pay for part/all of their Christmas food shopping in store.

What's more, cardholders that sign up will be entitled to bonus vouchers throughout the year to boost their total. And the Tesco scheme allows shoppers to add to this pot by paying cash into their account at the till, each time they shop.

Other Loyalty Schemes...

And big retailers are not the only ones offering such cards. Coffee shops such as Café Nero and Costa offer paper versions -- collect a stamp every time you pay for a coffee and your tenth cup is free. And sign up to collect your free Caffé Uno loyalty card to entitle you to 15% off.

General Rules to help you get the most from your loyalty card(s):

Make your shopping choices according to price, not points. It would be crazy to pay £4 for shampoo in Boots if you can buy it in Tesco for £3.50 -- the 4p earned on the Advantage card cannot compete with the 50p saved!
Take advantage of any other deals available to boost those points, but only if you would normally buy the products.
If you shop regularly at the same place, consider taking out the card -- you might as well earn the points if you're spending money there anyway.
Take advantage of bonus points where possible. For example, consider noting down the (non-urgent) products you need and buying them all at once during a Boots triple points weekend -- and print out coupons from the Boots machine to further boost those points.
Be careful with those cards -- it's pretty easy for a thief to use your points if you have your card stolen.
And don't forget to limit the amount of junk mail you receive by checking the terms and conditions carefully, when signing up.