With only two weeks until Black Friday, everyone wants to make sure they can bag the biggest bargains and make the most of their money.
Many retailers offer their own loyalty cards, with some brands like Amazon offering a credit card option too. If you’re considering picking up a rewards card to make the most of your money this Black Friday this is what you need to know.
James Andrews, senior personal finance editor at money.co.uk said: “Most large retailers offer loyalty cards, so if you’re a frequent customer you might be considering signing up to one in order to make the most of your Black Friday spending.
“Loyalty cards are a great way to get exclusive discounts and offers, and earn small rewards over time. They often offer you points every time you spend, so if you’re planning on making some big purchases on Black Friday, you could earn a lot of points.
“While loyalty cards like Tesco Clubcards and Nectar cards are completely free, some retailers also offer rewards credit cards. These allow you to earn much bigger rewards, including cashback, air miles and electronics, however they often come with a cost
“Rewards credit cards will often charge annual fees and high interest rates on debts to make the rewards possible. If you’re considering taking out a rewards credit card, it’s important to work out whether you are gaining enough from the rewards to justify these costs.
“At minimum you need to be gaining as much from the rewards as the annual fee to break even. A good way to check this is to look at how much you have to spend to actually earn a reward.
“The best cards can offer you lots of points for every £1 spent, but if you’re only earning one point per £1 then your reward may not be worth the money. For example, the Amazon Platinum Mastercard offers you 3 reward points for every £2 spent on Amazon Prime - along with a £40 gift card for signing up.
“Amazon Prime costs £7.99 a month, so you’ll need to be spending £533 a month on average to cover the cost of the subscription through rewards. Of course, Prime members get a lot more than just access to a rewards credit card for their money - but if you’re planning to make back your subscription it will mean spending rather a lot.
“Even if you plan on spending a lot with your rewards card, you need to pay the balance back in full each month to make sure the interest rate doesn’t outweigh any rewards.
“If you’ve got a rewards card that offers 0% interest on purchases you can use that time to spread your payments - but once this introductory period ends, you could end up paying far more in interest if you do not pay your balance off.
“The good news for people planning to make big purchases this Black Friday and spread the cost is that the 0% purchase cards with the longest interest-free periods are also rewards cards. Currently Tesco, M&S and Sainsbury’s all offer 22 or 23 months at 0% on purchases, as well as rewards.
“Just make sure you read the small print carefully, as many of the rewards on offer have terms and conditions attached to claim them.”
For more information on what you should look out for with rewards credit cards visit money.co.uk: https://www.money.co.uk/credit-cards/reward-credit-cards.htm
James has spent the past 15 years writing and editing personal finance news, specialising in consumer rights, pensions, insurance, property and investments - picking up a series of awards for his journalism along the way.