News & Views - Savantor

Do reward schemes work?

Friday, 30 November 2012

Does cashback, loyalty points or other reward systems actually offer something consumers are interested in? Research carried out by Defaqto identified 245 different credit cards available in the UK, of which 9% offer cashback. Points schemes and shopping rewards are offered with 20% of cards, making them the most common type of reward scheme, while 10% of the cards offer air miles. The report found that for 13 out of the 22 cashback cards available to customers spending £1,000 a month on their card would earn £100 or less in cashback over a year, with some of the lower paying cards only offering 0.5%. The lowest paying card would generate just £30.

However, the report suggests that cashback is popular with consumers as it forecasts continuing growth in the cashback market driven by strong consumer demand. The number of credit cards offering a cashback reward has doubled over the past two years, which has not been mirrored by other rewards features. The current 22 cashback cards compares with 11 in October 2010.

The research found cashback was ranked as the third most important feature for customers behind no annual fees and long interest-free periods. Among the over-55s cashback is the second most important feature behind no annual fee. The report says the maximum that can be earned with points schemes can be as high as £180 a year for a £500 monthly spend but it cites Which? research showing that one in two card customers never redeem their points.

A study earlier this year by Asda Money found that one in three credit card holders do not make use of their credit card reward schemes. Also one in three credit card holders claims that they have to spend too much on these cards to get a tangible return, while 24% said it takes too long to get these rewards. Cashback cards do not normally credit the money earned until the end of the year.

The catch of using a cashback credit card for spending is usually the higher-than-average interest rate most cards of this variety carry. If the cardholder does not pay it off in full each month, the interest they will be paying will cancel out any cashback earned. Maybe using the card in conjunction with cashback web sites that track your online spending like Quidco is a better option?

Savantor Services

Savantor Services

Savantor services are tailored to Client needs based on our core service areas

Specialist Resourcing Payments Strategy Platform Transition Operational Efficiency
Savantor Services

Job Opportunities

Consulting and contracting roles in the payments, mobile and banking arena within the UK and across Europe

View more
Savantor Services

Savantor Views

Find out more from our Savantor brochures, MarketEye back copies and Industry opinion

Collateral Market Eye News & Views Sign Up to receive MarketEye

Client Quotes

Moneris Solutions

"Savantor did an outstanding job of the review and I received nothing but positive feedback on the interaction with our management team."

Jeff Guthri, COO - Moneris Solutions - Canada

Market Insights

"Savantor did a good job in helping us understand the dynamics of a key growth area for Trionis. Savantor's ability to listen and their degree of commitment have always impressed me. They have been of great help in providing us important market insights and I would not hesitate to work with them again in future."

Ernst Verbeek, Managing Director - Trionis - Belgium

Commercial Card Migration

"Execution at its best. We're delighted that this project has been truly outstanding and received an award from 'The Banker'. Savantor provided crucial expertise that helped us keep all our promises in terms of delivery. The scheduling, planning and control regime throughout was excellent."

Chris Mason, Director - Commercial Cards EMEA - Citi - UK

Acquirer Risk Assessment

"The expertise provided by Savantor has greatly helped us evaluate our risk position and to take the right steps in managing our future risks. Strong, disciplined planning and an ongoing willingness to work closely with our staff played an enormous part in making this a very successful well-delivered project which will greatly help us in achieving our business goals."

Mark Healy, Chief Risk Officer - NEOVIA Financial - UK

Payments Workshop Material

"Savantor helped ACI build a payments onboarding workshop for new technical staff in ACI EMEA. Their extensive experience took our outline and built a great starting presentation of industry facts that we have now customised further into a half day session that is used for all new joiners. Our Americas and APAC regions have also taken the material and customised it for their regions. A great job by Savantor has meant new joiners to ACI hit the ground running."

Richard Sanders, Principal Solution Consultant - ACI - Worldwide EMEA

New Fuel Card Guidelines

"Savantor successfully assisted Clear2Pay by providing specialist EMV expertise."

Marie Costers, General Manager - Clear2Pay Open Test Solutions

Acquirer Transformation

"We needed a programme manager for a complex transformation who also brought a broad understanding to help stakeholders through the change. We have been delighted with the delivery and outcomes from this engagement with Savantor."

Michael Liquornik, Executive Vice President - Neovia Financial - UK

Card Migration

"I was impressed by the speed with which the Savantor team were able to start delivering and as a team they have made a significant contribution to the success of the Programme."

Bjorn Niels, Programme Director - ABN AMRO Bank - The Netherland

Clients - Request Support

Send us a support request and one of our specialists will be in contact to assist you.

Consultants – Upload your CV

Register your CV with us and gain access to a range of job opportunities through our online job search portal.