John Lewis has launched a new rewards credit card - the John Lewis Partnership credit card - which offers shoppers the chance to save money by accumulating points towards money off.
With inflation on the rise and interest rates adding to borrowing costs such as mortgages, making savings where possible makes good sense.
And often, reward credit cards can help make savings at your favourite store, as long as you always pay off your bill in full, otherwise interest charges will cancel out the rewards.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
We look at how the John Lewis Partnership credit card works and how it compares to other reward credit cards that can save you money.
How does the John Lewis Partnership credit card work?
The John Lewis Partnership credit card rewards shoppers by providing them with loyalty points when money is spent using the card.
You will earn five points for every £4 spent at John Lewis and Waitrose, dropping to one point for £4 spent in other retailers. But, if you use the card to pay for your everyday spending, the points could soon add up.
Cardholders can turn those points into a voucher to spend at John Lewis or Waitrose, at a rate of £5 for every 500 points.
The John Lewis Partnership credit card also allows you to spread payments if you make a big purchase early on, with a six month 0% period on purchases from when you open the account. The interest rate after that is 21.9% APR on purchases.
As with all credit cards, you should check your eligibility before you apply using the eligibility checker on the John Lewis website and always keep up with minimum repayments.
Which are the best rewards credit cards?
If you are a regular shopper at John Lewis or Waitrose, then the loyalty credit card can help cut costs, but it may also be worth looking at other reward credit cards depending on which reward suits you best.
Here are some of the rewards credit cards that are worth considering.
Avios credit cards
Credit cards that allow you to slash the costs of holidays are often the most popular, allowing you to accumulate Avios points.
The Avios scheme allows you to cut the cost of flights, hotels and car hire through the use of Avios points.
You can accelerate the rate at which you earn those points by utilising one of the various credit cards affiliated with the Avios scheme, such as the British Airways American Express credit card. For every £1 spent you earn one Avios, with a bonus £5,000 Avios on offer should you spend £1,000 in the first three months with the card.
What’s more, if you spend £12,000 over the year then you qualify for a companion voucher which can be used to take someone with you on a flight. The British Airways American Express credit card has no annual fee, though there is also the British Airways American Express Premium Plus card which allows you to earn more Avios on your spending, but comes with a £250 annual fee. Interest rate on the card is 28.1% APR - but again, if you are using the card for rewards, pay off the bill in full each month to avoid charges.
If you don’t like flying with British Airways or its partner airlines in the Avios scheme, then it may be worth looking into the Virgin Atlantic credit card instead which works in a similar way.
Clubcard credit cards
If you prefer to focus on earning rewards at supermarkets, then Tesco Bank’s range of Clubcard credit cards may be suitable. It has a host of cards offering 0% periods on purchases, balance transfers or both. The typical interest rate is 22.9% APR.
All of these rewards credit cards allow users to earn Clubcard points when they spend using the card, irrespective of where that money is spent. However, the rewards are much greater when you spend with Tesco ‒ five points for every £4 spent, rather than one point for every £8 spent outside of Tesco and Tesco Fuel.
Clubcard points can be converted into vouchers to spend at Tesco, at a rate of 100 points for a £1 voucher. Alternatively you can turn them into vouchers for partner retailers, which allows you to increase their value by as much as three times.
Nectar credit cards
A rival offer comes from another supermarket, Sainsbury’s, with its Nectar credit card.
Shoppers earn Nectar points when they spend with the card, earning three points for every £2 spent at Sainsbury’s, Argos, Habitat and Tu Clothing. That return drops to one point for every £5 spent in other retailers.
There is also a welcome offer in place for the card, meaning that so long as you spend £400 in any of the stores listed above within the first two months with the card, you’ll get a bonus 8,000 Nectar points.
Generally each Nectar point is worth around 0.5p when being converted into vouchers, though there are some rewards partners who offer a greater return when you use your points to spend with them.
The interest rate on the card is 21.9% APR.
How to maximise your returns from a rewards credit card
Rewards credit cards can be an excellent way to get something for nothing, but there are certain things to bear in mind if you want to get the best possible return from using them.
It’s worth thinking carefully about which cards are going to allow you to earn rewards most quickly ‒ if you only ever shop at Tesco, there’s not much value in opting for a Sainsbury’s card, for example.
Yet you also need to think about which cards offer benefits that you most value. Yes, you may be a regular shopper at John Lewis, but if you are planning a big holiday in the next year or so then the Avios points on offer from an Avios card may be a more valuable reward than money off your groceries.
The way that you use the card is also important. The rewards from these credit cards are bigger if you spend more with them, meaning it’s a good idea to put as much of your regular spending on them as possible.
However, this needs to be money that you were planning to spend anyway, rather than money spent simply to earn rewards.
John Fitzsimons has been writing about finance since 2007, and is a former editor of Mortgage Solutions and loveMONEY. Since going freelance in 2016 he has written for publications including The Sunday Times, The Mirror, The Sun, The Daily Mail and Forbes, and is committed to helping readers make more informed decisions about their money.
US stock trading app Robinhood launches in the UK
The low-cost trading platform has opened another waiting list for British investors - following two failed attempts to launch in this country - and is hoping to be fully operational next year.
By Ruth Emery Published
New property listings rules: What should an estate agent be telling you?
News New guidance tells estate agents what must be included in property listings - here is how it affects buyers and sellers
By Marc Shoffman Published
NatWest-owned Ulster bank boosts easy access savings rate to 5.2%
Rates on easy access savings accounts have hit over 5%, with Ulster Bank now giving savers the chance to earn 5.2% on their cash savings. We have all the details.
By Marc Shoffman Published
Moneybox raises market-leading cash ISA to 5%
Savings and investing app MoneyBox has boosted the rate on its cash ISA again, hiking it from 4.75% to 5% making it one of top rates. We have all the details.
By Ruth Emery Published
October NS&I Premium Bonds winners - check now to see what you won
NS&I Premium Bonds holders can check now to see if they have won a prize this month. We explain how to check your premium bonds
By Kalpana Fitzpatrick Published
October’s NS&I Premium Bond winners revealed - have you scooped £1 million?
Two lucky NS&I Premium Bond winners are now millionaires this October. Find out here you are one of them
By Kalpana Fitzpatrick Published
The best packaged bank accounts
Advice Packaged bank accounts can offer great value with useful additional perks – but get it wrong and you could be out of pocket
By Tom Higgins Published
Energy bills to fall 7% under new price cap
Energy bills could fall by an average 7% from October under the new Energy Price cap announced today. We explain what the new cap mean for you and when it will come into play
By Pedro Gonçalves Published
Bank of Baroda closes doors to UK retail banking
After almost 70 years of operating in the UK, one of India’s largest bank is shutting up shop in the UK retail banking market. We explain everything you need to know if you have savings or a current account with Bank of Baroda
By Vaishali Varu Published
The best options to earn cashback on spending
From credit cards and current accounts to cashback websites, there are plenty of ways to earn cashback on the money you spend.
By John Fitzsimons Published