LONDON, ENGLAND, November 28, 2009 /24-7PressRelease/ — A Financial Facts report has analysed the impact of the development of the traditional British loyalty card and its evolution into the credit card market.
One-in-four Britons are part of Tesco’s Clubcard scheme, with Sainsbury’s and Asda offering similar equivalents. As part of the recession, people are understandably more drawn to these offers than ever before, especially as credit card companies are not taking advantage of consumer demand. An August 2009 report from Sainsbury’s Finance found that the proportion of credit cards offering a reward scheme declined by 11% from the previous year. Consumers are genuinely keen to make use of all their cards’ added bonuses: in 2009, 54% of cardholders claimed all or a large part of the rewards they had earned, while in 2008 only 23% had made the effort.
Presently, only 10% of Clubcard holders have a Tesco credit card, but a rapid expansion is underway. There are currently six in-store Tesco bank branches with approximately half a million customers with savings accounts with a combined savings balance of 4.6 billion pounds, but that number is steadily rising.
Gideon Ingram, an ASDA official, comments: “brands…that consumers know and trust can provide customers with the same, if not better, service than banks. Just because we offer the same products as banks, doesn’t mean we have to behave like them.” But after Tesco hit the headlines for the blunder of paying Universal Cycles GBP984,000, instead of GBP984, for six Muddy Fox Suspension Bikes, should the public really trust them with their money?
The initially attractive promise of 12 months interest free credit becomes less appealing when you consider the sharp rise to 16.9% thereafter. The main purpose of credit cards is to cover potential emergencies – the prohibitive rates of these store-cards could cause long-term tragedy.
Many credit card companies, such as the Bank of America, offer rewards credit cards that offer the same value with less of the risk. Additionally, they cover a wide-range of stores, from Play.com to Sony – being tied down to a single supermarket may be more damaging than committing to a single credit card.
Website: http://www.financialfacts.org
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