An increasing number of people in the UK are turning to credit and charge cards that offer rewards such as cashback, retail vouchers and travel incent…
An increasing number of people in the UK are turning to credit and charge cards that offer rewards such as cashback, retail vouchers and travel incentives, in order to help them manage their finances, according to new research from American Express.
Almost half of individuals (47 per cent) have a rewards card and four in ten admitted they are more likely to redeem them now than they were a year ago.
Those with a rewards card estimate that by cashing in their points, they have generated average savings of £137 a year, which up from £123 in 2012 and £116 in 2011. This all adds up to over £3 billion amongst people carrying these type of cards in the last 12 months.
As individuals struggle to make ends meet each month due to the rising cost of goods, many are looking for innovative ways to keep their head above water.
This research found that rewards are becoming more important in helping to balance household finances, with 17 per cent claiming they rely on them for "incidental and unexpected expenditure", while a further 11 per cent are using them to "fall back on during tight times".
Some 11 per cent claim their rewards every month with three quarters redeeming at least once a year.
Interestingly, cardholders are now looking for opportunities to rack up bonuses as quickly as possible with just under half (49 per cent) saying they are more likely to pay with their credit card rather than use a debit card or cash in order to earn valuable rewards.
Worryingly, however, just over a third of people (36 per cent) will spend more in shops that offer a loyalty programme. Using plastic to cover the cost for daily essentials can be dangerous and several people have fallen into credit card debt as a result.
While rewards schemes certainly offer a great way to supplement incomes, they must be used responsibly in order to stay out of financial trouble. Planning the month ahead is a good way for people to keep track of what they are buying and how they are paying for it.
By James Francis