Does loyalty pay?
Loyalty is a consumer disease; retailers utilise every tactic possible to keep us shopping in their stores without checking out the competition and reward new customers over existing ones.
Their prime weapon is loyalty cards, allowing you to collect points in specific shops when you spend; and usually requiring you to return there to redeem them. While credit or store card reward schemes work in a similar way, the distinction is loyalty cards don’t allow you to pay with them (except when redeeming points).
When to use loyalty schemes
Never feel the shop’s giving you something for nothing, as schemes are incorporated into pricing policies. To evaluate the overall cost, consider loyalty points gained like a discount. The difficulty is their value is often deliberately misted, so use the Loyalty Checker to reveal the real value of each point.
This story should help...
Irma Rightone loves the Boots Advantage card scheme, believing it's very generous as it gives four points, each worth a penny, per pound spent. So in she pops to buy her favourite matt foundation for £6, then shines in the glow of her 24 points.
Ivor Secret loves the same foundation, and while his wife’s not looking, sneaks out to buy it. He’s seen it at the local supermarket for £5.50. He realises Boots points are an effective 4% discount, and calculates its real cost in Boots at £5.76, so buys it in the supermarket instead.
Yet of course it’s not practical to weigh up every single product’s overall price, therefore the golden rule is...
Never choose where you shop due to loyalty schemes, yet always use it if you shop somewhere with one.
Though don’t think ‘points are better than cash'; after all, you can't spend them in nearly as many places.
Watch for the vicious circle of loyalty
Many in-store promotions now deliberately give discounts as extra points rather than money off. This is very clever, because while £1 of points feels like a one pound discount, of course it only costs the store what it paid its suppliers, not the full retail price.
Add to that the fact it ensures you must return to their store to spend the points. When you do, it’s likely you spend again, earning more points, requiring you to return yet again to redeem them; earning more points, requiring you to return again...
Most of the big loyalty points have a credit card too; here you don’t just accumulate points on spending in a specific chain, but on all spending.
This can be a boon, provided you repay in full each month so there’s no interest. Yet always check the actual gain from using the credit card rather than just a loyalty card, then compare this to what you could earn on the top cashback credit card or other credit card reward schemes.
Watch the multi-earn argument
You need to be careful here, as promotional leaflets for many credit card schemes use a neat double-counting trick. Take this example from the Tesco Clubcard credit card.
While the marketing intimates using this card in Tesco is a hefty boost; it’s not. Its normal loyalty card pays 4 points per £4 anyway, so the credit card only adds one extra point; put another way you gain a quarter of a point per pound spent. It’s this amount you should compare to top cashback cards.
Every loyalty scheme has its quirks and can be manipulated. There are two obvious routes: first, try to earn more points for the same spending; next, try to beat the average point's value on whatever you redeem. To help here are scheme-by-scheme point-maximising tips.
You accumulate Tesco points at a rate of one per pound. You earn them instore at Tesco, for using E.On and a few others.
Each point is worth a penny if used for instore shopping, and they’re sent out in vouchers of a minimum £1 each quarter.
- Clubcard Deals. Quadruple points value when redeemed elsewhere
This is the powerhouse of Tesco point boosting. Trade in normal vouchers for Tesco's special Clubcard Rewards vouchers, available either online or in-store, and each £5 voucher becomes worth £20.
Clubcard Rewards include days out, magazine subscriptions, holidays, gifts, hotel rooms and more. Amongst the options are RAC membership (see Breakdown Rewards), an Alton Towers ticket for £7 of points, or a year's subscription to Cosmopolitan for £9.
The list price of goods in the brochure is sometimes higher than the market price, so you may not always get the 4x value, you usually get at least 3x. Yet if it’s something you would’ve bought anyway it is a great deal.
- Tesco Credit Card. An additional 1 point per £4 spend
Provided it’s paid off in full at the end of the month, so there’s no interest, the Tesco Credit Card can be a points booster. You earn 1 point per £4 spend, which if redeemed in-store at Tesco is a rather paltry 0.25% return on spending. Yet trade them in for Clubcard Rewards and it becomes a more respectable 1%.
Compared to the top cashback card, which pays up to 5% cashback initially (see top cashback cards), this is a bit weak; however if you can’t get one of those it comes into its own. If you don’t pay it off in full, the APR is 16.9%
- Join Tesco’s Clubs Mailing list. It sends special extra points vouchers
If you join one of Tesco’s club’s, such as Wine, food, baby or healthy living (see full list) usually included in the e-mails sent are vouchers to earn extra points when buying relevant products.
- Extra clubcard points. Can lead to Tesco paying you to shop
Look out for any Tesco promotions offering extra clubcard points, as these can open up loopholes where it’s worth buying the goods even if you don’t want them.
The best examples are the famous Beef In Gravy & Johnsons baby powder loopholes which originated on this site and ended up in all the papers. It worked like this
When you bought any two Johnsons products, you got 100 extra points. The cheapest item was baby powder, at 76p; this meant you could therefore spent £1.52 to get 101 points, worth £4.04 of Clubcard deals vouchers, making more than £2.50 PROFIT!
With the similar beef in gravy episode, one man bought a few £100s worth, donated it to a homeless shelter and used the points for a return trip for two to New Zealand. Though do be slightly careful as Tesco reserves the right to block people for fair usage breaches. All major loopholes will go in the free weekly email.
Even if you can’t make an actual profit sometimes it can lead to serious discounts, e.g. Tesco once sold iPod Shuffles for £49, a good price and it gave 999 bonus points, on top of the normally accrued points, these were worth £42 of Clubcard Deals; meaning the iPod effectively cost £7.
- Tesco Clubcard Plus.
Tesco used to offer a scheme where you could receive two points per pound, rather than the usual one, on in-store or online shopping, known as Clubcard Plus account.
It's stopped offering this to new applicants though existing users can continue using it for the extra points. While it says it has no plan to re-offer it in the near future, any updates will be in the free weekly email.
Use a Nectar card in Sainsbury, BP, Homebase, D&A, Expedia and others (see full list) and every £1 spent usually gains 2 points.
Points are worth an average 0.54p and can be redeemed online or by phone for a range of days out, gifts or shopping discounts off member stores.
- Pick the right redemptions. Boost what points are worth
The start point for Nectar is to remember a point when spent in store at Sainsbury is worth 0.5p, yet many of its redemptions work out at better value than this. Therefore when picking you can calculate to see if you’re getting a good deal.
For example, Vue cinema tickets cost1,000 points, (1,300 in London) so translate that into Sainsbury spending and it’s £5 (£7 in London). If the actual cost of the cinema ticket if you paid in cash is higher, which in most cinemas it is, it shows this is a good choice to redeem points on.
- Summer Sales. Massively increase the value of your points
For the last couple of years Nectar’s held Summer sales, where each week a different category including DVDs & electricals has only needed half the usual points to redeem. There’s no indication whether it plans to continue this scheme (any updates will be in the free weekly e-mail) but if it does, it’s the perfect time to spend a Nectar stash.
- Thomson Local. Earn 50 points each time you use it
A Thomson Local promotion means if you find a business via the Thomson local directory or website and it has a Nectar symbol by it, you get 50 points (worth c. 25p). It’s slightly fiddly but if you do it a lot it adds up. Register your card, dial the business via Thomsons 0845 number (part of BT's free calls allowance) and you get the points.
- Surveys. Answer a few questions for points
Nectar periodically launches surveys or questionnaires which enable you to gain 50 points or more from spending a couple of minutes filling them in (also see the Surveys for money guide showing you how to make cash doing this). - The Nectar Credit Card. Earn more wherever you spend.
If you’re an avid Nectar collector, then you can earn more points by using the Nectar American Express credit card, though always pay it off in full each month or you’ll be charged 18.9% APR interest which dwarfs any points gain.
In non-Nectar stores it gives 1 point (worth c. 0.5p) per pound spent, in Nectar stores (e.g. Sainsbury) you get 2 points, on top of the 2 points you get for using your loyalty card (so 4 points in all). Plus spend £500+ in a month and you get an additional 500 points (worth c. £2.50).
It also gives double credit card points in the first three months, so that’s 2 points on normal spending and 4 on Nectar stores spending (ie. 6 in total) though the 500 point bonus doesn’t get doubled.
Overall this puts it up as a very decent alternative to the top paying cashback card, provided there’s something you want from the Nectar catalogue.
- Beware Nectar Awards. Often you can get more in cash
Nectar is a very wide ranging scheme and tends to offer a variety of different deals paid in points. For example you can gain points for selling/recycling your old mobile phone with it, yet always evaluate the cash value of the points (see the loyaltychecker) to compare that with the cash equivalents that are available (Use the MobileValuer tool to see if it's worth it.
Use the Boots Advantage card in-store/online, except for infant's milk, prescriptions, stamps and gift vouchers and you earn 4 points per pound.
Each point is worth 1p and can be redeemed on most things instore.
- Use the Boots ATM. Hidden extra discounts and coupons
Many, mainly larger branches have what looks like an cash machine called an 'Extra offers kiosk'. Stick your card in it before shopping and it lists immediately printable discount vouchers, for specific products or general discounts.
This is especially important if you’re spending big as usually there’s a voucher giving lots of extra points on spending of £30+ or £50+. At one point it randomly selected 200,000 1,000 point vouchers, worth a tenner each, to spend in store, but only for those who checked it.
- Mega Points Weekends. Hold off on big purchases if you can
Boots commonly has 'mega weekends', either online or in-store where if you spend £50, you get 1,000 extra points (worth £10). When one hits it’s worth collecting together everything you were planning to buy in Boots to grab the excess. Or if you’re doing a really big shop, split what you’re buying into £50 units as there’s no limit on how many extra points bonuses you can get.
Where it’s especially good value is for Pay-As-You-Go mobile phone users, as tops ups are rarely discounted so Boots points are the next best thing. If this is a much bigger top up than normal, do check your credit won’t date before you use it up though. Where possible, Megapoints weekends will be included in the free weekly MoneySaving email.
- Check the Advantage card magazine. It often contains free points incentives
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Always look in the Advantage magazine, which is available in-store, for points coupons. For example it sometimes gives 500 points (£5 worth) for people joining the prescription collection service.
- Join Boots Clubs. Extra or double points on specific items
Both the Boots Parenting Club and healthclub for over 60s send mailouts or give special offers for relevant goods, allowing you to earn more points. The parenting club also gives double points on over 1,000 instore baby products.
- Don’t lose online points. Fail to register in store and you lose them
Spend at Boots.com, and you must ‘collect’ your Advantage Card points from one of the Boots ATMs (Extra offers kiosks) within six months or you’ll lose them. Points are ready for collection five days after you spend.
- Beware Boots Awards. Often you can get more in cash
Boots is a very wide ranging scheme and tends to offer a variety of different deals paid in points. For example you can gain points for selling/recycling your old mobile phone with it, yet always evaluate the cash value of the points (see the loyaltychecker) to compare that with the cash equivalents that are available (See Top Old Mobile Buyers) to see if it’s worth it.
Similar to the Nectar scheme, AirMiles can be earned on spending in a variety of places including Shell, Avis and Tesco (Clubcard points can be converted).
Don’t confuse it with frequent flyer schemes, as you don’t actually earn points for traveling, though many of its rewards are travel based.
- Airmiles are worth 8.5p. They’re more valuable than other schemes
On average we’ve calculated an AirMile to be worth around 8.5p which means it’s worth much more than any of the other major points. In itself that doesn’t make it better, as it depends on how quickly you can earn the points, but it does mean that when choosing between AirMiles or the same number of another schemes points, go for AirMiles
- Get a free BA European return. Airmiles credit card freebie
Open a Lloyds TSB Airmiles Duo* card via Airmiles website before 31 January 2010 and spend £10 on it by 31 March 10, and you'll receive a voucher for 1,500 Airmiles; enough to exchange for a return British Airways 'Zone 2' destination flight including all taxes and charges. So just grab a card, but pay it off in full, so there's no interest or the APR’s 15.9%.
This includes Budapest, Faro, Stockholm, Ibiza, Cagliari and loads more via British AIrways and others or two returns to Zone 1 destinations like Paris or Amsterdam. The only downside is you MUST book at least one night in a hotel through Airmiles (see the Credit Card Freebies guide for more info).
You can also continue to earn Airmiles for spending afterwards, though again always pay off in full so there’s no interest. You’re actually given two cards; a Mastercard and an Amex, and both allow you to earn points when you spend, though not the same amount. The Amex gives 1 AirMile per £10 spent, but the Mastercard which is really just a backup should Amex not be accepted only gives 1 AirMile per £50 spent.
- Don’t lose your Airmiles. They date after 2 years.
Changes in AirMiles terms and conditions from Feb 2009 are a major problem for anyone who hasn’t earned a new AirMile in two years and has over 500 AirMiles (worth c. £40). It means you’ll have been sent a letter informing you they’ll expire within six months.
Yet even if you’ve less AirMiles, after a year you may need to pay £30 before spending them. This is a ridiculous rule, but can be easily combatted. Just go and earn 1 new AirMile, the easiest way is buy a little petrol at Shell, or convert a Tesco voucher. If you’re worried about your miles expiring, call its customer services on 0844 49 333 32.
- Earn AirMiles in Tesco Simply convert your Clubcard points
Using Tesco’s Clubcard Deals you can convert 250 Clubcard points (worth £2.50 of instore spending) for 60 AirMiles worth £5.10. This is a good deal and a great way to boost your stash if you’re a regular Tesco shopper.
- Tesco Credit Card v Airmiles Card. Which is the best
There are three credit cards which pay out in AirMiles; the two Lloyds TSB Airmiles card and the Tesco credit card where points earned can be converted.
Only use a credit card this way if you repay in full each month, so there’s no interest, otherwise its cost dwarfs any reward.
| Typical APR | Tesco Points Earned | Airmiles Earned | Airmiles Value | |
| Lloyds TSB Airmiles Amex* | 15.9% | - | 100 | £8.50 |
| Tesco Credit Card | 16.9% | 250 | 60 (2) | £5.10 |
| Lloyds TSB AirMiles Mastercard* | 15.9% | 20 | £1.70 | |
| (1) Always pay off in full each month then no interest will be charged. (2) Assumes the 250 Tesco points are then converted via Clubcard deals to AirMiles deals. Correct: June 2009 | ||||
Lloyds AirMiles Amex is therefore the best payer, yet as Amex isn’t always accepted, the Tesco card is the best backup (though do watch you credit score if you’re applying for lots of cards)
- Flights aren’t the best return. Days out prove better
On a pure mathematical calculation, after valuing the point worth, using AirMiles for ‘experiences' such as a Merlin annual pass (valid at Chessington, Legoland and Alton Towers), proves better value than flights and car hire.
However it’s very common that there are 2for1 vouchers available to these places (see the Days Out Vouchers daily list) and if there are you can’t use AirMiles so you’re better off avoiding it.
- Buy paper based voucher on eBay? It’s not lawful
Old paper-based AirMiles are commonly flogged on eBay* and while it’s cost effective, AirMiles says this breaches their terms and is unlawful.
For all schemes, the key to maximising value is to choose the best value redemptions. The LoyaltyChecker tool can help you do this for over 40 different schemes.
- Pick the redemptions you’re interested in.
E.g. at the time of writing from the Sony Pulse Scheme a Blu-Ray of Casino Royale is 2,000 points and a 2GB Walkman MP3 player is 6,600.
- Value the points.
Now use the Loyalty checker to see what the value of those points is. Here 2,000 points is worth £9.20 and 6,600 is worth £30.36
- Check the cost to buy.
See how much you’d pay for the goods if bought, a quick way is to use the MegaShopBot. In this case, while Casino Royale has a recommended retail price of £24, it’s available for £8.93. The Sony Walkman is available for £16.99
- Choose the best value redemption.
Pick the one that’s the best use of points. Here while the Blu-Ray costs £9.20 in points and about the same in the shops, the Walkman costs £30 in points but can be bought for half that in cash. Therefore the Blu-ray is a much better use of points.
Which is better, 5,000 Nectar points or 1,000 AirMiles? Loyalty points or miles are awarded for flight booking, credit card spending, shopping and much more, but it's deliberately made difficult to evaluate most schemes to promote a feel good factor not reflected by their true worth.
The LoyaltyChecker tool gives you a quick assessment of your current stash of over 40 schemes, based on points average not boosted value.
Scheme |
Points Value |
Scheme | Points Value |
Airmiles |
8.65p |
Nectar Points |
0.53p |
BA Miles |
0.68p |
Tesco Clubcard Points |
In store 1p Double Up 2p |
Boots Advantage Points |
1p |
WH Smith |
1p |
For info on the valuation scheme used see the Loyalty Checker |
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