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By Reno Charlton
Staff Writer, 12 September 2008
RECENT reports are again highlighting the need for credit card reward schemes to be more transparent, as many cardholders continue not to claim their points.
According to this report, a number of industry officials have stated that there needs to be greater transparency when it comes to reward based credit cards, such as how rewards are earned, how they can be claimed, and the terms and conditions involved in each scheme.
While reward credit cards are available for a broad range of goods or services, such as travel, holidays, shopping discounts and gift vouchers and loyalty points, the majority of cardholders using reward credit cards are failing to collect their rewards for one reason or another.
Reward credit cards should be rewarding
Reward credit cards 'reward' cardholders generally in proportion to the amount spent on the credit card, and for many people reward credit cards offer an effective way to make something back from the card provider.
Assuming a reward credit card holder repays their balance in full each month (as is the norm advice) rewards earned are done so free of charge – as no interest is being paid on outstanding balances.
Reports of the continued 'unclaimed points'
Recent research carried out by Sainsbury's Finance shows that over the past 3 years the number of rewards based credit cards on the market has gone up from 122 to 190.
The data also showed that 51% of cardholders had some sort of rewards facility on their credit cards.
Worryingly though the figures also show that around 23% of these rewards cardholders have failed to collect their rewards over the past 12 months.
Of these, 23% were not sure how to even claim the reward, 24% thought that claiming the reward was too difficult a process, and 42% said that the value of the rewards was not even worth bothering about.
Call for greater transparency
Since the report was collated, officials from Sainsbury's have been prompted to call for greater transparency from credit card providers offering reward schemes on their cards.
One official from Sainsbury's said: "The credit card industry is increasingly using reward schemes but our research suggests that many of these either offer poor value or, because the rewards are too difficult to redeem, a false value. Consumers have a right to know what their credit card reward schemes are worth in pounds and pence and also how easy they are to use and redeem. The industry has a great deal of work to do in this area".
Compare reward credit cards
Many reward credit cards can be tempting; they may offer "free" flights around the world, or even thousands of pounds off the cost of a brand new car.
However, even though these reward schemes may sound tempting - if you tend to fly a particular route and need to on a particular date, or you really want to be driving a Mercedes instead of a Vauxhall... then while you may earn the points you may also find yourself never claiming them either.
The first rule of thumb for any reward credit card is "are you going to use those rewards?" If the answer is any less than a definite "yes" - keep looking for something you will use - and use it often.
It's also important to compare reward credit cards by their actual value. Some points may be worth 0.0001p, while another scheme may offer points worth 1p. There may also be more or less points awarded for the amount of money you spend.
This site's reward credit card calculator will tell you how many points you'll earn on each scheme depending upon the amount you spend each month - and also the real value of these points in terms of the value of the reward you could be claiming.
Lastly, if you're unsure you'll ever get round to claiming any type of point - considering opting for the 'instant' option. Amazon gift certificates sent out automatically when you get enough points, money off your Sainsbury's or Tesco shopping (redeemable at the checkout), or even plain and simple cash back!
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