More Brits using rewards credit cards

By Marianne Curphey

As the economic crisis affects household disposable income, more Brits are trying to find ways to cut the cost of their spending, leading them to apply for -- and use -- more rewards cards. While this can be a smart way to deflect costs, it can also be tricky.

M&S Bank research found a significant trend in people taking out cards specifically to receive rewards. The survey, carried out nationally by Opinium Research, found that more than half of those questioned said loyalty points influenced how and where they shopped. And among 35 to 54 year olds - the group most likely to have a young family and high household bills - more than half had taken out a rewards credit card.

"When money is tight you might as well get something back on the amounts you spend in big stores," says Jasmine Birtles, founder of rewards-trending

She says sometimes people feel uncomfortable about using loyalty and rewards cards because they are suspicious about how stores use the personal data they collect.

"Stores like to know what customers are buying, how often they come in, what kinds of deals they go for and that is why they can offer you tailored discounts to get you to shop more," says Birtles. "But they ... are not watching you personally as you go shopping. I've had people ask whether they will report you to the Inland Revenue, but stores don't care about that. What they are interested in is how to get you to come to their shops and spend more money in them."

Andrew Hagger, founder of MoneyComms, says stores are keen to promote return visits, which is why the best deals are always available in-store. "They want to secure our loyalty and persuade us to spend more. The rewards they offer are always most generous in their own store in terms of points, vouchers or money off."

However, Birtles warns against taking out lots of different credit cards, lest you lose track of your personal finances.

"Generally speaking, credit cards are a very useful tool if you know what you are doing," she says. "They are rather like sharp knives - if you are a chef they are an invaluable tool, but if you are not careful and have a bad attitude you can end up hurting yourself."

Popular rewards cards offers
You can compare offers from rewards cards using this list. Here is a sampling of some of the most popular cards:

The M&S Credit Card will give you one point for every £1 spent in Marks & Spencer and one point for every £2 spent elsewhere. There's no annual fee; 100 points will get you a £1 voucher, which you can then spend in Marks & Spencer.

The John Lewis and Waitrose partnership MasterCard gives you one point per £1 spent in John Lewis and Waitrose. There's no annual fee, and every 500 points you earn are worth £5 in vouchers.

The Tesco Clubcard credit card gives you one point for every £4 spent in each purchase transaction (£4 minimum spend) at Tesco. Each Tesco partner offers different rewards. Many offer 1 point per £1 spent. Every three months, Tesco will add up your points and turn them into vouchers, which they will send you automatically.

The Sainsbury's Nectar card gives you double Nectar points on your Sainsbury's shopping and one Nectar point for every £5 spent on your card elsewhere. You can collect 2 Nectar points per £1 spent in store or online, 1 point for every litre of fuel you purchase and 1 point for every bag you reuse in-store. There is no annual fee; 200 points converts to £1.

The Avios Rewards Credit Card from Lloyds Bank enables you to upgrade up to business class when you spend £7,000 a year. There are no foreign transaction fees when spending abroad and you receive double Avios for six months. However, there is a £24 annual fee.

See related: 5 tips for using rewards cards wisely, 4 traits that make you a good rewards card candidate

Published: 23 December 2013