Should You Be Loyal To Your Loyalty Card?

Loyalty cards have been around for a long time. Tesco pioneered loyalty cards in the UK, which is one of the world's largest loyalty card markets, in 1995.

Other retail chains like Sainsburys, Safeway and Boots soon followed suit. Loyalty cards work like this:

They are issued to shoppers at a particular retail outlet and the shoppers earn points for every pound they spend. The points earned vary with the scheme, but they range from one penny to as much as four depending on the scheme and how the points are earned.

For example, Nectar card holders could earn four points if they use a Nectar card and Nectar credit card when paying for a transaction. 

What Do Shoppers Gain From Using Loyalty Cards?

Effectively, shoppers get discounts from using loyalty cards. Some loyalty card schemes offer special discounts to card holders at point of sale. Others send discount vouchers for particular products at intervals throughout the year. The points earned while spending are also converted into money-off vouchers to be spent in the supermarket or retail outlet.

Some credit card companies also offer loyalty-type schemes so that cardholders gain points for every pound spent on the credit card. These can also be used to get discounts on a range of products, including food, wine and holidays.

What Do Retail Outlets Gain From Loyalty Cards?

To get a loyalty card, shoppers have to sign up, giving information about their name, address and postcode. They may also be asked for an email address and mobile phone number. Retail outlets can do a lot with this information. Unless customers indicate that they don't want it, retail outlets can pass customers' details to their trading partners, giving others the chance to sell products to their customers.

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• The Value Of Having Branded UK Credit Card Loyalty Programs
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Retail outlets can also begin to build up customer profiles. In addition to the information on the application form, every shopping transaction is stored in a massive database, so that retail outlets know their customers' spending habits inside out. This means that they can target the offers they send to particular customers. For example, if customers regularly buy wine, the offers in their loyalty card statement will relate to discounts on wine or on products that go well with wine.

Is The Loyalty Card Discount Worth It?

Loyalty cards should be thought of as discount cards, so it's easy to work out whether the discount being gained is worth it for shoppers. First of all, shoppers need to assess the value of the item they are purchasing. Second, they should see how many points they have to use to get the discount. This should be multiplied by the pence value of each point. That will make it clear whether the discount they are getting is worth it. Shoppers should also compare the price with the loyalty card discount to the price of the item elsewhere. With loyalty cards, as with other cards, shoppers need to be aware of the true value of the discount they are getting.

Interested in a loyalty card? Try our credit card rewards section for the latest loyalty card offers!

More Information:

• Do You Need To Have More Than One Credit Card?
  Deciding whether or not to have more than 1 UK credit card can be a difficult decision to make. On the one hand, you want to keep a careful control on your personal finances and having numerous creditors makes this difficult. On the other hand, it can be convenient to have more than one credit card, for example in an emergency. So, should you have more than 1 credit card?
• How To Earn Nectar Points With Reward Credit Cards
  The Nectar point scheme is a scheme that allows credit card users and other shoppers to earn points through purchases. The Nectar scheme has been running since September 2002. As with other reward points schemes, the Nectar points scheme allows shoppers to earn at the rate of 2 points for every pound spent.
• Reward Credit Cards
  In the UK today we spend over £trillion on our credit cards! During peak hours major credit card companies can be transacted over 20,000 payments a second! No matter how you look at it, that’s big business and there are lots of profits to be made by card issuers.
• Airmile Credit Cards
  These days most major UK credit card providers offer a vast array of reward programs to try and entice potential new customers to apply for a card. Since the inception of reward packages, one of the most popular packages that applicants go for is airmile credit cards.