A trip to Alton Towers? That'll be £2,000, please

The Nectar loyalty card celebrates its third-birthday next month, but one of its founder members won't be at the party: Barclaycard is pulling out.

Barclaycard holders have just two weeks to earn more points before the credit card provider's association with the shopping reward scheme ends on 31 August. (There is, however, no time limit on when Nectar points can be redeemed.)

Barclaycard says a poll of its 11.2 million customers has shown they would rather have free travel insurance or discounted holidays than Nectar points. But it is not the only major company associated with Nectar cards to be doing a U-turn.

After two years, Vodafone is also withdrawing from the scheme. Its customers, like Barclaycard's, will earn points only until the end of August.

The mobile phone company says it wants to cut its prices instead.

"We can use the money previously ploughed into the Nectar scheme to focus on call tariffs and bundle deals for all customers," says Vodafone's spokesman, Toby Robson.

Only 13 per cent of its 15 million customers used the scheme, he adds.

Vodafone and Barclaycard may have decided to abandon ship but others have taken their place. The home phone company TalkTalk and credit card provider American Express are the latest to sign deals giving Nectar points to loyal customers.

But the loss of support from high-profile companies has raised questions about the real value of schemes such as Nectar.

Some £460m racked up on loyalty cards is never redeemed, mainly because customers are not aware they have collected points, or forget to use those they have already accrued, according to research from the consultancy International Customer Loyalty Programmes (ICLP).

Some high-profile retailers, such as the supermarket chain Asda and mobile phone company Orange, have consistently thumbed their noses at loyalty schemes. They claim this allows them to keep their prices as low as possible, to the benefit of all their customers.

Mike Naylor of the consumer body Which? is equally sceptical. "[Loyalty schemes] are not for the good of the consumer," he says. "They're there to get us to spend more."

It costs companies millions to promote, advertise, handle and manage the cards, he adds. "Better value could be given to consumers by putting the money into price cuts across the board."

Yet today, points-and-prizes schemes such as the Tesco Clubcard, the Co-op Dividend, the Boots Advantage card and the Nectar card are a feature of the UK's consumer landscape.

The average home has two loyalty cards and subscribes to at least one other reward-based scheme (usually online), says ICLP's Tony Clarke. Typical shoppers also collect points at least twice a week that are later exchanged for "rewards" - ranging from holidays to kettles - or alternatively used to get a cash discount when paying for goods.

If you have a Tesco Clubcard or a Nectar card (which you can use at Sainsbury's, among other stores), the points you collect will give you the equivalent of a 1 per cent discount on your shopping.

Say you spend £250 at Sainsbury's - racking up 500 points. This will get you £2.50 off your next bill at the check-out. With a Tesco Clubcard, spending the same £250 will likewise result in a saving of £2.50.

Alternatively, you might choose to exchange yourpoints for a voucher towards free admission to the Alton Towers theme park.

But are these rewards really worth it? With Clubcard the rules are at least consistent: the reward is worth four times the voucher's face value. So a £28 ticket to Alton Towers costs £7 in vouchers.

It may sound like a good deal - but since you have to spend £100 to get a £1 voucher, that free trip to Alton Towers would add up to a £700 shopping bill.

At Nectar, there is no direct correlation between the value of rewards and points collected: these are set individually by Nectar. For the same Alton Towers treat, you would have to spend £2,000 to amass the necessary 4,000 points.

If it all looks complicated, consider that this is, in fact, the more straighforward part of such schemes.

Add in promotions with free points and double points, and "double dipping" (when you use a credit card that is part of the scheme to buy goods already carrying points) and it becomes fiendishly difficult to work out which loyalty card offers the best all-round value.

If you're looking for a flexible reward scheme, Nectar currently has more members (16) than Tesco Clubcard (which has 10).

But one of the most competitive deals on offer is exclusive to customers of Boots, the high-street chemist. This gives you four points per pound spent - equal to a 4 per cent discount.

But any loyalty scheme will be less rewarding if the store offers poor value for money on its goods. "It's much more important to pay the right price for goods [by shopping around]," says Mr Naylor. "Loyalty schemes tend to give little value. You're limited by where and what you buy - and the bottom line is that you're probably paying over the odds."

Many consumers refuse to take part in loyalty schemes because stores use data to track their spending patterns.

But for those who don't mind the loss of privacy, better value could be had from a regular credit card with cashback - if they pay off their bill each month.