Go back to the main article | How the reward schemes are valued |
What's a point worth?
In a TV programme, I was asked to create the best ‘worst card' on the market; one that looked good, but actually was abysmally anti-consumer. Of course, it was a stunt and not a real card, but many signed up to my MACS card (scam backwards) and one big reason was you got 12 Macs points per pound of spending.
Sounds good doesn't it… 12 points per pound. Yet what's a point's worth? A MACS point was actually worth 0.0001p, in other words, nothing - and 12 nothings is still nothing.
It's this that allows reward schemes to create a magical ‘something for nothing' mystique. For example, a Marriot point is worth 0.22p compared to a GM Rebate* point worth £1, so one GM point is better than 400 Marriot points. Yet even once you've worked this out, to compare credit cards you then need to work out how many points you get per pound of spending.
Confusing isn't it? This marketing bamboozling leaves many people with a pile of never-used points.
How schemes were assessed
Seven rewards were randomly selected and valued per scheme. The valuation was its ‘real' rather than recommended retail price e.g. a CD is valued at £10 if it's commonly available at that price rather than the recommended £16 retail price the reward scheme values it as.
Only rewards received on general spending are included, so if a card pays higher rewards in specific shops, that spending is excluded, as that's effectively a shopping loyalty bonus not a credit card reward scheme.
The calculated amount is an average value
This valuation is based on an average amount. By correctly targeting the right rewards to redeem your points on, it is sometimes possible to substantially increase the amount.
The best example of this is the Tesco Clubcard Scheme. By redeeming vouchers in store, a £2.50 voucher is worth £2.50, however by using the Tesco Clubcard Deals brochure, which includes days out, specific goods or such things as RAC membership, then you get up to four times the face value of the voucher, making it worth £10.
In the Tesco case, the difference is so stark, these two schemes have been valued separately, however for other cards it's important to be aware values have been averaged.
Go back to the main article