Consumers opting for credit card ‘rewards’

Most are taking points over interest-free debt, as cashback or loyalty points account for 37 per cent of cards in the Morgan Stanley Credit Card survey and zero interest for only 17 per cent.

Patrick Muir, marketing director for the credit card firm, commented that it was a “shift in the dynamics of the credit card market” and said he felt that rewards were long-term benefits, while interest free deals were usually only introductory offers.

Many firms, particularly American Express, have recently ended their interest-free balance transfer deals as cases of bad debt rise.

While Mr Muir says that reward schemes can bring long term benefits, those who fail to redeem their rewards could be hit by high interest rates which could worsen their debt situation.