The best consumer loyalty reward schemes

Barclaycard's new credit-card reward scheme will "revolutionise" the cashback market, say some campaigners. But does it offer the best deal?

Barclaycard Freedom will allow Barclaycard holders to earn 'reward money' (basically cashback) when shopping at up to 30,000 retailers. What sets it apart from reward schemes offered by Tesco, Nectar and Air Miles is its simplicity. Barclaycard holders don't have to register for the scheme or collect vouchers. The cashback is automatically amassed on their credit card and can be used to pay for items in stores that are a part of the scheme.

So, considered purely as a reward system, Barclaycard Freedom could well be a winner. However, the retailers taking part have yet to be announced. It will be interesting to see if those with their own schemes, such as Tesco, Sainsbury's or Boots, take part. But even if they don't, Barclaycard Freedom should stir up some competition in the sector as the other big players move to make their own schemes more attractive.

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As a cashback credit card, Barclaycard Freedom offers a reasonable deal. The 'reward money' is earned at a rate of 1% so you get 1p back for every £1 spent. The average cashback rate for credit cards is just 0.5%, says Martin Lewis of MoneySavingExpert.com. But those cards earn you cashback that can be spent anywhere, not just in participating stores. As such, Barclaycard Freedom isn't as flexible.

For a higher rate of cashback there's the American Express Platinum Cashback credit card. This is available to households with an annual income of £30,000 or more. It offers a 5% cashback rate for the first three months up to a maximum of £100 then up to 1.25% after that. American Express also offers an Express Rewards credit card that earns you points as you spend. Unlike Barclaycard Freedom, you can earn points anywhere you can use the card. You get more in certain stores and they're turned into gift vouchers rather than cashback. The trouble is, quite a few retailers don't accept American Express.

Then there's the Tesco Club credit card. Use this for all your shopping and you'll earn a Clubcard point for every £4 you spend worldwide on top of the standard Clubcard points earned when you use the card in Tesco stores.

The big downside to all these cards is the interest rate charged 19.9% on the American Express Platinum card, for example. So these cards are only for those who can and do pay off their credit-card balance in full each month.