Many of the UK's leading supermarkets offer credit cards to their customers because they help establish brand loyalty in the fiercely competitive retail sector. Consumers’ use of such cards also help supermarkets to understand their customer's habits when they shop elsewhere, so they can more quickly respond to changing tastes and trends.
Of course, from a customer perspective, these cards can be hugely valuable too, since cardholders receive points for shopping they were already likely to do with their favoured supermarket. These points can then be exchanged for a huge range of products and experiences.
Currently, most UK supermarkets offer credit cards, including:
Morrisons, notably, do not currently offer a credit card, but they established their instore reward scheme later than other supermarkets, and therefore could not offer their customers cards to match their rivals.
Aside from credit cards, some supermarkets have gone so far as to establish their own banks to enable them to offer a broader range of financial services.
Some people are reluctant to apply for a supermarket card for fear that they cannot use it elsewhere. However, although many order-style store cards restrict their use to particular stores, supermarket cards can be used anywhere you see the symbol of the payment processor (Visa or Mastercard), even in rival stores.
Of course, one of the main reasons supermarkets offer credit cards is to retain customer loyalty, so there are reasons you might not want to use your card elsewhere. This is because supermarket cards tend to offer more generous rewards when you shop in their stores. You can still earn points everywhere else, you just won't get the same level of rewards. And, of course, you'll forfeit the standard rewards you would have earned through the traditional loyalty scheme.
Each card has particular eligibility criteria, so it is worth checking you meet this before applying. It's also worth noting that some cards offer very competitive balance transfer and purchase teaser rates. However, as with other market-leading products, you'll need an excellent credit score to be accepted.
If you have a poor credit history, your chances of being accepted for a supermarket card are reduced considerably. Nevertheless, some supermarkets do offer cards to those with poor credit. The APRs on these products are much higher, to reflect the increased risk bad credit customers present, but, if you diligently repay your entire balance every month, these cards can be a good way to get a little extra back when you spend.