Barclaycard to launch ‘broadest’ reward scheme

Barclaycard said on Monday it would be launching the country’s “broadest ever retail rewards scheme” in March.

The “Barclaycard Freedom” scheme will be available to the company’s 8m cardholders and will provide rewards in a wide range of shops, restaurants and online outlets across the UK.

Experts said the launch of the scheme, which will reward people in pounds and pence on their current Barlaycard cards rather than in vouchers, could “revolutionise” the cashback card market, which has fallen steeply during the past five years.

Martyn Saville, credit card expert at Which?, said: “If enough retailers sign up, this simplified reward scheme could revolutionise the cashback credit card market. Most cashback cards offer around 0.5 per cent cashback, often with strings attached.

“If Barclaycard can offer 1 per cent cashback, available to redeem immediately in a wide range of local shops, they could easily corner the rewards market with this new offer.”

According to financial information group Defaqto, only one in 20 credit cards currently enables users to earn cash on the transactions they make, down from more than a quarter of all cards in 2005.

At the same time, the cashback reward schemes that are available have become increasingly complicated, often offering higher returns during an introductory period and different rates depending on how much is spent each year.

Many cards also have caps on the amount of cashback people can earn, while higher rates are available if the card is used in certain retailers.

Defaqto said providers were facing increased costs and had suffered from falls in revenue, such as through the sale of controversial payment protection insurance, causing them to cut back on the benefits they offer.

David Black, banking specialist at Defaqto, said: ”For those who always repay their entire outstanding credit card balance each and every month, it makes a lot of sense to use a credit card that offers a reward.

”Credit card providers are facing a number of hits on their established income streams and I regard it as inevitable that credit cards on offer will become less attractive as the providers seek to regain the lost income in other ways and also cut back on the cost of reward schemes.”