The top rewards cards revealed!

Find out which of these ten high street rewards credit cards offers shoppers the best deal.

Rewards credit cards give shoppers a little something back every time they spend. If you tend to do a lot of shopping at one retailer in particular, the benefits could really add up. But the trouble is every reward scheme is a bit different from all the others, making it difficult to judge whether you’re really getting good value.

New research from Which? has sorted the wheat from the chaff with a comparison of ten rewards schemes operated by some of the largest high street retailers in the country. Let’s find out which schemes aren’t as rewarding as they might appear followed by the overall winner.

But before we do that note that to help make it easier to calculate the comparative value of each scheme, the rewards have been converted into a cashback equivalent for both shopping in-store and elsewhere. Of course, to encourage customer loyalty, the highest rewards are usually found in-store.

The losers

The research revealed the least generous schemes were to be found at the supermarkets giants with Asda, Tesco and Sainsbury’s getting a resounding thumbs down.

Asda offers an in-store cashback equivalent of just 0.5% and 0.25% at all other retailers, although these rates are doubled in the first three months. But, on the plus side, free home delivery on grocery shopping is available if you spend £99 or more using the Asda Reward Credit Card. You’ll also be entitled to a 5% discount at Asda Living Stores.

Meanwhile, the Tesco Clubcard Credit Card is even worse with equivalent cashback rates of just 0.25% no matter where you spend. In other words, shoppers will earn just one point for every £4 spent. 250 Clubcard points will be converted into a Clubcard voucher worth £2.50.

But relegating Tesco to the depths of the table is a little unfair because Clubcard vouchers can be used to buy Clubcard rewards, such as foreign holidays, days out or restaurants, which increases their value by up to four times. In terms of a cashback equivalent, this would equate to 1% which would push Tesco higher up the table.

On top of that, you can also earn Clubcard points using an ordinary Clubcard on these same credit card purchases made at Tesco stores. In this case, you'll also earn two points per £1 spent. But then anyone with a Clubcard is entitled to this reward, so Which? has regarded it as an entirely separate benefit.

The Sainsbury’s Nectar Credit Card also fails to impress with an in-store cashback equivalent of 1% for the first two years, dropping to 0.5% thereafter. Shoppers will earn two Nectar points per £1 spent. For purchases made everywhere else, you’ll earn just one Nectar point for every £5 spent which is equivalent to a tiny cashback rate of just 0.1%.

The winner

The top rewards cards are streets ahead of the supermarkets. The House of Fraser scheme, for example, offers 3% cashback equivalent on in-store shopping which is much more impressive. But the winner overall was BHS with an in-store cashback equivalent to a generous 5%, with 1% earned in all other shops.

The scheme itself is simple enough providing shoppers with 5 points for every £1 spent in BHS and one point per £1 spent anywhere else. 500 BHS rewards will be converted into a £5 BHs voucher.

Shoppers will also benefit from double points on their first BHS purchase - equivalent to a whopping 10% cashback. So, if you spent £50, you would earn enough points to qualify for £5 voucher in one transaction alone. What’s more, a 20% off discount is also available at BHs event days.

The table below summarises the results for all ten schemes covered by the research:

High street reward credit cards

Source: Which? *= 1% in store and 0.5% elsewhere cash equivalents available for first three months. **= For the first two years only.

Use your reward card well

So now you know which schemes are better than others. But there’s also a hazard you should watch out. You’ll have no doubt noticed the ‘typical APR’ column in the table above. These figures outline the interest rates charged if you don’t pay your bill off in full every month.

It’s pretty clear that, with rates as lofty as these, you’ll soon wipe out the benefit of any rewards you’ve earned if you allow the typical APR to kick in. So it’s quite simple: Never buy anything using a reward card which you can’t afford to pay off before interest charges are incurred.  

Having said that, some of these cards offer special 0% on purchases deals which means you can enjoy interest-free shopping for a limited period and earn rewards at the same. If you have a card like this, don’t forget you must still pay the minimum monthly repayment during the interest-free period.

The Tesco Clubcard Credit Card and Sainsbury’s Nectar Credit Card both offer generous 0% on purchase periods. Tesco is the market-leader at 13 months, closely followed by Sainsbury’s with 12.

Cashback alternative

The top rewards schemes are certainly a great way of earning an extra bonus, but is there a better way? After all, if you never shop at BHS, the market-leading 5% cashback equivalent will be of little interest to you.

Personally, I think cashback credit cards are a better alternative since the cash you earn can be spent anywhere without restriction. There are also some generous cashback rates on offer. The American Express Platinum Cashback card, for example, offers an introductory 5% cashback in the first three - up to a maximum of £100 - and up to 1.25% depending on how much you spend thereafter. But Amex isn't accepted everywhere. Alternatively, the more widely-accepted Egg Money Mastercard offers 1% cashback, no matter how much you spend. This card charges a £1 monthly fee however.

Compare reward and cashback credit cards at lovemoney.com

More: Five savvy ways to use credit cards | A new 16 months interest-free credit card