When customer loyalty doesn’t pay

Tesco has infuriated millions of customers by announcing a major change to its popular Clubcard loyalty scheme. Clubcard members received an email last week telling them that their loyalty points can now only be exchanged for triple the face value in rewards vouchers. Previously, shoppers could switch their points for up to quadruple the value in rewards vouchers for some of Tesco’s retail partners, including Pizza Express and Legoland.

There was so much outrage that Tesco has now backed down on the speed of the change. The cut from four times to three times the rewards will be delayed until summer. But the cut will be going ahead – and may be a sign that supermarket reward cards are set to become significantly less generous or could be on their way out altogether.

Supermarkets have long believed that it pays to reward customers for loyalty – and to gather data on their shopping habits to target them with promotions more effectively. Tesco was a pioneer in this area, setting up its Clubcard in 1995. But it’s increasingly unclear whether this is still worth the effort on Tesco’s part. “Shoppers are no longer monogamous,” Natalie Berg, research director at Planet Retail, told the BBC. “The idea of being loyal to a particular supermarket is a thing of the past.”

The end of the relationship

Most of us have two or three different supermarket loyalty cards in our wallet and many of us don’t even care that much about the rewards they offer. Just one in 20 of us would stop shopping in a store if it scrapped its loyalty scheme, according to a survey by TCC Global.

In times of rising inflation and wage stagnation we’re more interested in getting the best price for our weekly shop than messing around trying to work out how to get the most from our loyalty points. This is reflected in the success of discount supermarkets Aldi and Lidl, which account for almost 12% of UK supermarket sales. Neither of them offers a loyalty scheme, focusing on keeping prices low instead.

But don’t abandon your loyalty schemes yet. As long as they offer value – and Clubcard still does even after the changes – it’s worth getting points when you shop. And if you’re tired of all those plastic cards clogging up your wallet, there’s even an app (Stocard) that lets you upload all your loyalty cards into one virtual place.


Get divorced on the cheap

Divorce is notoriously expensive once the solicitors get involved in a dispute. Even if you’re aiming for an amicable separation, you could be looking at bills of £3,000 each, reckons the Money Advice Service.

However, in an effort to ease the burden on the court system, the Ministry of Justice last year made it possible for couples to divorce online, as long as both parties agree. Taking advantage of this could help divorcing couples save a sizeable sum. For example, Amicable offers to process your divorce for a mere £300. Add in the required £550 court fees and you could separate for well under £1,000.

Still, there are drawbacks to using a cheap online service. The basic package from Amicable doesn’t cover financial settlements. Fail to reach a signed, legally binding financial settlement and your ex could turn up in the future and stake a claim to half of your wealth. So Amicable also offers more expensive packages that cover financial arrangements with prices rising to £1,425 plus court fees to manage every aspect of your divorce. And last week, Co-op launched an online divorce service that costs £600 plus divorce fees and also gives you the chance to consult with solicitors by telephone to help you make sure that everything is settled and legally binding.

Even if you use an online service that writes a financial settlement for you, be aware that it will probably not give you financial advice – instead, it just makes a legal document that reflects your wishes. This could cause problems if you are splitting pensions or other complex financial arrangements. So while an online divorce could be a cheap option if your split is straightforward, spending a bit more on solicitors could pay off in the long run if you have complex finances.


Pocket money… sneaking around the ban on card charges

• As of midnight last Friday, firms can no longer charge customers for using a credit or debit card, says Rupert Jones in The Guardian. However, since the fees “have long been a money spinner for many businesses”, some companies are simply “finding sneaky ways to get around the ban”. Online takeaway firm Just Eat introduced a 50p fee as a “service charge” for both cash and card payments. Cinema chains including Vue and Everyman are charging “online booking fees” of around 75p. And many local authorities are still charging “handling fees”, including Ealing Council, which levies a  “chunky” 2.5%.

• Parents are having to “subsidise” the government’s flagship childcare policy, says Haroon Siddique, also in The Guardian. The scheme is supposed to provide 30 free hours of nursery school for three and four-year-olds. Yet nurseries have long insisted that the hourly rates paid by the government are too low and are having to claw back the shortfall by charging parents for meals, nappies and trips, or raising fees for younger children or non-government funded hours. Only 35% of places were genuinely free, according to a survey by the Pre-School Learning Alliance, while 21% of providers do not think their business will be financially viable in a year’s time.

• The insurance industry is sounding the alert on an “obscure tax change” that is likely to cost millions of savers £250m a year, says Vanessa Houlder in the Financial Times. Holders of certain investment products provided by insurers are expected to lose up to £150 a year in extra tax, after the government froze the indexation allowance – which provides tax relief for the impact of inflation on capital gains – on 1 January. The chancellor claimed it would have a “very modest impact on savers”, but the Association of British Insurers estimates that 11.6 million holders of whole-of-life and endowment policies (which combine insurance and investment schemes) will, on average, pay an extra £21 each per year.