Part 2: How to Compare Retail Reward Credit Cards
Retail reward credit cards come in all shapes and sizes: some have their discounts stuck on as an added extra, some wouldn't exist without them.
To find the retail reward credit card that's right for you...
They're good if...
- You're a creature of habit
Retail reward credit cards are ideal if you’re already using the service or services associated with the credit card regularly and rarely change your shopping habits.
- You're planning on spending a lot in the near future
The majority of retail reward credit cards come with introductory offers so if you’ve got some expensive purchases to make in the near future its worth applying sooner rather than later to pick up the extra points.
- You need to spread the cost of some spending
Many retail reward credit cards come with an introductory 0% on purchases deal which could help to spread the cost of your spending. Even without the offer, the interest-free period every month could be enough to offer some extra piece of mind.
- You never miss a payment
Since any interest you pay on a retail reward credit card could potentially outweigh the rewards themselves and APRs on these credit cards tend to err on the high side, it’s extremely inadvisable to let your balance roll over at the end of the month.
It’s even less advisable to miss a minimum monthly repayment as this could lead to your retail rewards being withdrawn so only apply if you need miss a repayment.
- You’re willing to share your rewards
By adding an additional credit cardholder or sharing your retail reward credit card with a partner or trusted friend you can potentially double your spending... and your rewards.
They're bad if...
- You like to shop around
Retail reward credit cards tend to reward loyalty so if you prefer to shop around you could potentially earn more with a cash back credit card scheme. There are a few exceptions: the Egg and American Express reward credit cards, for example, offer points a wider number of shops.
- You have an outstanding credit card debt
Interest paid on any credit card will outweigh your rewards so if you have any existing credit card debt try to repay it before taking out a retail reward credit card. A 0% balance transfer credit card could help you to repay a debt more quickly.
- You could save more by changing your spending
Retail reward credit cards shouldn’t be seen as an excuse for increasing your spending, just taking advantage of what you’re already going to spend so consider whether you could save more by switching your allegiances to cheaper retailer.
Retail reward credit cards best buys...
What to look for...
When comparing retail reward credit cards there are a few points that you can considered to help you choose the right retail reward credit card for you.
- What retail rewards will you be able to earn?
Deciding upon which retail rewards you would like to earn is one of the most important factors to consider when choosing a retail reward credit card.
The retail rewards on offer can range from money off a new car, to free broadband services, to savings off your weekly shopping bill.
- ... and which retailers or service providers can you earn rewards with?
It's a good idea to choose a retail reward credit card that allows you to earn reward points or discounts with retailers or companies that you already shop with or use.
Some retail reward credit cards will allow you to earn free products or services with just one retailer or company. However, there are some retail reward credit cards that work in partnership with a number of different retailers, offering a greater choice of products and services to redeem your points for or get shopping discounts with.
- How many reward points will you earn?
Different retail reward credit cards will offer different reward schemes, offering more or less points for your pound.
It's important to remember, that while it's important to know how many points you will earn on your spending, it can be a misleading way of company retail reward credit cards.
Different reward schemes may require more or less points to claim a free product or service, so even if a particular retail reward credit card offers less points for your pound, you may need not as many points for a reward.
Some retail reward credit cards will also offer you bonus points when take out the card and use it for the first time. This can be a helpful boast to start off your retail reward earnings.
- ... or how much will you save from the discounts on offer?
Retail reward credit cards that offer savings or discounts usually don't actually require you to earn them, as they are offered exclusively to customers just for being cardholders.
The savings or discounts on offer may be limited to one retailer or they may be offered with a range of different retailers and companies. The actual amount of money-off you'll receive may also vary, so it's worthwhile finding out how much you will save when choosing a retail reward credit card.
- What is the typical APR, or interest rate on purchases?
Obviously you'll want to choose a retail reward credit card that offers rewards with your chosen retailer or service provider.
However, for the month's you carry a balance over on your retail reward credit card, it's important to consider the typical APR or interest rate on purchases.
The typical APR is a rate quoted to help you compare credit cards, and includes the interest rate on purchases and any applicable annual fee.
What to watch out for...
- Are there any limitations on your reward claims?
Some retail reward credit cards may only allow you to earn a certain amount of money-off a product or service. So it's important to find out what this limit is, so that you know when to stop earning points and claim your retail reward!
- Will your retail reward points expire?
When you earn retail reward points you should find out if they have 'expiration dates' so you can make sure to redeem them for free rewards while they are still valid.
Reward points that do expire will still give you plenty of time to accumulate enough points for a pretty decent reward, usually around 3 years.
- Cash transactions
It's always best to try and use your debit card for any cash transactions that you may need to make, because credit cards often charge higher interest rates and handling fees for cash transactions.
If you are going to use your retail reward credit card for cash transactions, find out how much the interest rate will be on these transactions and also how much the handling fees are.
Cash transactions include withdrawing cash at an ATM machine, getting 'cash back' at the supermarket, buying foreign currency or traveller's cheques and can also include gambling transactions.
- Is there an annual fee?
Although most retail reward credit cards don't charge an annual fee, some might, and as an extra cost, it's important to find out if you will be charged an annual fee and how much it will be.
Annual fees are fees charged each year for holding the account.
Don't forget!
- You can only earn reward points on your purchases
Reward points will only be awarded when you pay for your purchases with your retail reward credit card, including buying goods or services from retailers and companies.
Unfortunately, you can't earn retail reward points on cash transactions or balance transfers. You also won't earn them on any interest or fees you are charged.
- Check for expiration dates
Find out if your retail reward points have 'expiration dates' and how long they will remain valid for.
If your retail reward points do expire, then remember to save them up and then redeem them for a free reward while they are still valid.
If you’ve chosen your credit card already, check the how to use retail reward credit cards section for more on how to apply for, use and lose your credit card. If you need to know more about how retail reward credit cards work see our how they work retail reward credit cards.
Compare retail reward credit cards
This best buy guide is updated monthly, which means if any facts, rates or fees change during the course of a month this guide will not reflect those changes until the next scheduled update.
While we will make every effort to ensure and maintain current and accurate information in this guide, readers are always advised to check rates and fees with the credit card provider before signing up.
Date of last check: 3rd March 2010 |
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Part 1: