Personal Finance: Cards splash out on big spenders

GONE are the days when you thought yourself lucky if the bank kindly offered you a credit card for pounds 12 a year. The new Alliance & Leicester Gold MoneyBack card launches tomorrow and A&L pays you to use it. The bank is offering between 50p and pounds 4 cash back (depending on where you spend the money) for every pounds 100 you spend. A&L is hoping to attract plenty of affluent customers (earning pounds 20,000 or more per year) who plan to hit the January sales using their new cards.

If you use the credit card a lot, and pay off your bills in full each month, you could earn enough to receive a cheque for hundreds of pounds at the end of 1999.There's no annual fee and the APR is 9.4 per cent on transferred balances, and 17.4 per cent for all new spending.

Most credit cards pay you back pounds 1 worth of points or cash for every pounds 100 spent. The most successful of this new breed is Goldfish. These cards are held by more than 800,000 people, who get vouchers for money off gas bills, or discounts off shopping at Boots or Asda stores.

Nevertheless, around 85 per cent of cardholders do not bother to redeem loyalty points from their credit card. The Bradford & Bingley building society withdrew its perks scheme earlier this year after the cost of running it proved greater than the benefits it was offering to customers, few of whom collected their bonus points anyway. Goldfish claims its easy claims system means more than half its customers redeem their points.

American Express has joined A&L in offering straight cash-back deals to customers - who automatically get a cheque (A&L) or money credited to their account (AmEx Blue). The standard A&L MoneyBack card is a good deal if you don't qualify for the new Gold card (see box above). American Express is more expensive (19.5 per cent APR against A&L's 17.4 per cent) and also charges pounds 12 a year.

Cash-back deals are also useful if you want to give money to your favourite charity. Dedicated cards usually pay 25p to the chosen charity for every pounds 100 you spend. You can boost this to 50p-pounds 4 per pounds 100 by using the A&L card and then redirecting the cash to charity.

Sainsbury's offers a good deal - all spending in-store on the supermarket's Visa card attracts double Reward points (see box on the left).

Some cards collect points towards a specific product, and these can offer a higher return. Around 600,000 GM Card users collect points and earn money back on a new Vauxhall car. The return is higher than most other cards at 3 per cent, so spend pounds 1,000 and you will get a pounds 30 discount. Since launch in 1994, some 84,000 cars have been bought through the scheme.

The UK's most popular credit card, Barclaycard, has a less attractive Profile points scheme. This allows you to collect towards a range of products, earning one point for every pounds 10 you spend on your card. You have to spend tens of thousands of pounds to get something worth having: a Sony Walkman costing pounds 50 in the shops is available for 1,250 Profile points, which means spending pounds 12,250 on your card. Not much of a deal.

Contacts: A&L MoneyBack (Standard, Gold), 0800 838383; American Express Blue, 0800 700111; GM Card, 0345 462777; Goldfish, 0345 609060; Sainsbury's, 0500 405060.

rewards for spending pounds 1,000

Card Cash/ APR% Return

points (1st 6 months) per pounds 1,000

GM Card Points for 20.8%(12.9) pounds 30**

No fee rebate

AmEx `Blue' Cash 19.5%(9.9) pounds 10

pounds 12

A&L `MoneyBack' Cash 17.4%(9.4*) pounds 5-pounds 40***

(Standard and Gold)

No fee

*Introductory offer on transferred credit card balances only.

**Rebate on Vauxhall car only.

***A&L Gold Card (launches 4.1.99) rebates up to pounds 40 per pounds 1,000 spent. Cardholders must earn pounds 20,000 or more.

the supermarket card boom

More than 13 million Sainsbury's Reward Cards have been issued since June 1996. The card earns one point for every pounds 1 you spend in its supermarkets, petrol stations and Savacentre stores. Collect 250 points and you will get one pounds 2.50 voucher, a 1 per cent return, although special offers can bump this up; you might get 40 points on a jar of pickled onions worth pounds 2.99.

With one Sainsbury's Reward voucher you can get pounds 5 off a meal for two adults at TGI Fridays, Beefeater and Brewers Fayre restaurants.

One Reward voucher can be exchanged for 40 Air Miles or pounds 2.50 off your Sainsbury's bill.

Credit cards issued by Sainsbury's Bank earn two Reward points for every pounds 1 spent in its stores, falling to one point for money you spend elsewhere.

Tesco's Loyalty Card also gives you a point for every pounds 1 spent, with special offers on top. For example, there are extra points when buying petrol and on various promotions. Tesco says the average customer gets pounds 10 in money-off vouchers every quarter.

You can also collect points on the Boots Advantage Card, which can be redeemed in the store, although certain products including prescription medicines are excluded from the scheme. Spend pounds 10 and you will get the equivalent of 40p in points, a 4 per cent return, which is much better than most other loyalty cards.