How much are points really worth?
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.
Luckily there's a mathematical solution. Seven randomly picked rewards per scheme were assessed, e.g. 4,000 Nectar points buys a £30 Legoland ticket, so here a point's worth 0.75p, then the average value taken.
| Sample of Loyalty Point Values | |||
| Scheme |
Points Value |
Scheme |
Points Value |
| AirMiles |
7.8p |
Nectar Points |
0.54p |
| BA Miles |
0.7p |
WH Smith Points |
1p |
| Boots Advantage Points |
1p |
Tesco Clubcard Points |
Instore: 1p Clubcard Deals: 4p |
| Goldfish Points |
0.7p |
Virgin Points |
0.4p |
| For more schemes and how to get your points valued see the Loyalty Checker | |||
When to use loyalty schemes
Consider loyalty points as a discount
Once points' values are transparent, you can clinically assess their worth. As an easy example, the Boots Advantage scheme pays four points per pound spent and each is worth 1p off instore spending, so it's an effective 4% discount: by far the high street's most generous.
However always incorporate the product's price. Imagine the Blairwhite teeth enhancing kit costs £30 in Boots and £27 in neighbouring Superdrug; the Advantage card's 4% discount only reduces it to £28.80, so it's not worth it. And never think ‘points are better than cash', after all you can't spend them in nearly as many places.
The golden rule is never choose where you shop due to loyalty schemes, yet shop somewhere with a scheme and always use it.
Watch for the vicious circle of loyalty
Many stores now give discounts as extra points rather than cash off. While £1 of points feels like a £1 discount, it only costs the store what it paid its suppliers, not the retail price, plus it ensures you must return to their store to spend the points. On your return, it's likely you'll spend more, earning more points, requiring you to return yet again to redeem them – ad infinitum.
The game changes with a credit card
Many credit cards also pay loyalty points, but never choose a card because of this unless you pay it off in full each month, so no interest's charged. Otherwise the interest cost dwarfs the monthly return. In many cases they're not worth using anyway as cashback cards return more.
For a full evaluation of all reward cards read Best Credit Card Rewards Article.
Watch the multi-earn argument
The new Tesco Clubcard credit card pays 5 points per £4 spent in Tesco and 1 point elsewhere and, like other schemes, thus promotes ‘use your card in store and gain more'.
Yet a normal Clubcard pays 4 points per £4 spend in store anyway, thus credit card use only gains 1 extra point, the same as elsewhere, so you'd actually be better off spending in Tesco on a cashback credit card and using a normal Clubcard.
Increase the number and value of points earned
Every loyalty scheme has its quirks and can be manipulated. Try to beat the average point's value on whatever you redeem. To help here are point-maximising tips for four major schemes.
Tesco Clubcard
- The Basics. Tesco spending with its Clubcard pays 1 point per pound, as does spending at Powergen, Marriott, Johnsons Cleaners and a few others, or using its Clubcard Credit Card. Vouchers are sent out quarterly and each point's worth a penny discount off Tesco shopping.
- Never Redeem Vouchers Instore. Redeem vouchers on Tesco's special Clubcard Deals Brochure and points values increase four-fold. Amongst options are RAC membership at £24.75, an adult Alton Towers ticket £7, a year's subscription to Cosmopolitan £9.
- Double Earn Points. Receive 2 points per pound on instore/online shopping paying by Tesco's little known Clubcard Plus account. It requires a standing order, but just do this for £1/month then top it up at customer services before each shop, as cash is immediately credited. Avoid going overdrawn though as the rate's not good! Applications are phone only, the official number is 08457 104 010 but you should be able to get through via freephone 0800 406050 too.
- Look For… any promotion offering extra Clubcard points. E.g. Recently Tesco was selling Ipod Shuffles for £49, a good price and it gave 999 bonus points. With the normally accrued points, these are worth £42 of Clubcard Deals; spend them on something you'd have bought anyway and the Ipod effectively cost £7.
- Tesco Clubcard Website: Tesco Clubcard
- Discuss this: Tesco Clubcard Points Boosting
Nectar
- The Basics. Use a Nectar card in Sainsbury, Debenhams, BP, TalkTalk and others 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.
- 5,000 free points. Sign up to an Amex Nectar* credit card for 5,000 free points providing you spend £200 in the first 90 days. As long as you spend the £200 on items you would have bought anyway (food shopping, for example), this is £25 for free, which can be spent on anything in the Nectar catalogue. As a rewards scheme, regular Sainsbury or Debenhams spenders will find this card useful. (Read my full analysis of the Amex Nectar card).
- What to use points on. Many DVD boxsets, Blockbuster video vouchers, restaurant discount vouchers, Eurostar trips and days out to theme parks all come in at better value per point than just redeeming vouchers in member stores.
- Nectar Website: Nectar
- Discuss this: Nectar Points Boosting
Boots Advantage Card
- The Basics. Use Boots Advantage card instore/online, except for 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. Many branches have what looks like an Advantage card ATM. Stick your card in before shopping and it lists immediately printable discount vouchers, for specific products or general discounts.
- Treble Points. Instore or online double or treble points days or weekends are common. If you're going to spend there anyway, it's very useful as treble points means an effective 12% discount. It's especially worthwhile for PAYG mobile phone users, who can top up cheaper. Where possible, heads up for these offers are in the Weekly Money Tips email.
- Boots Website: Boots
- Read a full Boots Treasure Trove article on how to save in Boots
- Discuss this: Boots Advantage Points Boosting
AirMiles
- The Basics. Points earnable on spending in a wide range of places like Avis, Leslie Davis and Homebase. It's often confused with frequent flyer schemes, but actually you don't earn points for traveling (apart from booking via AirMiles itself). The flight association is because most of its rewards are travel based. On average an AirMile is worth 7.8p.
- NatWest replaced by Lloyds TSB. For years NatWest's range of credit cards have doled out Airmiles. It's now giving it up and the rewards are switching to the Lloyds TSB group. Interestingly, when you apply for a Lloyds TSB card you automatically get two not one - a Mastercard and an Amex. Yet you don't earn the same amount of rewards for both - while the Amex version pays twice as much as the old NatWest card (1 Airmile per £10 spent), the Mastercard pays a paltry amount and isn't worth bothering with.
- Apply via the Airmile site for 1500 free miles. If you apply for the Lloyds TSB card through the AirMiles website before 30 April 08 you’ll get 1500 miles credited simply for signing up. More details in the Credit Card Freebies article.
- Flights aren't fancy. In general, after valuating the point worth, using AirMiles for ‘experiences' such as London Eye tickets and Legoland, proves better value than flights and car hire.
- eBay buying isn't lawful. Old paper-based AirMiles are commonly flogged on eBay* and while it looks cost effective, AirMiles says this breaches their terms and is unlawful.
- AirMiles Website: Airmiles
- Discuss this: Airmiles Points Boosting
Good loyalty use pays; £80 weekly Tesco spend on a Clubcard gains 4,160 points a year, worth £41.60 as an in store-discount. The same on Tesco Clubcard Plus pays 8,320 points, which redeemed on Tesco Clubcard Deals is worth £330, eight times as much.
| Annual Spend |
Clubcard Points |
In-Store Value |
Deals Vouchers | |
| Clubcard Spending |
£4,160 |
4,160 |
£41.60 |
£165 |
| Tesco Clubcard Spending Plus |
£4,160 |
8,320 |
£83.20 |
£330 |
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