Money: We're not all loyal subjects yet

Everyone loves a freebie. So why do so few of us use our credit card points, asks Clifford German

FAGIN would have understood all those credit-card shoppers who gloat over the number of points they have accumulated on their loyalty cards but never actually spend.

A poll by NOP for the GM credit-card company shows that 85 per cent of shoppers had never redeemed any of the points they had earned, and only one in three of those who did redeem points did so in the previous year. Most say they are waiting for something worthwhile, like a discount on a new Ford or Vauxhall, although by waiting they are in fact making a free loan to the credit-card company.

Even Barclaycard Profiles, which claims to be the largest and is certainly one of the oldest loyalty schemes, has 6.8 million card accounts but only five million have registered for free Profile points and only 750,000 cashed in any points last year.

Critics say the cards encourage "customer promiscuity", with many people using the cards once and then getting bored, which makes the information they collect on shopping patterns commercially useless. NOP also found that 55 per cent of cardholders think the rewards, which average 0.25 per cent on every pound spent, are far too small to matter.

But they matter to someone; there are now nearly 150 registered loyalty schemes operating in the UK, with more than 55 million cards currently held. The number of loyalty cards has risen 25 per cent in the past 18 months. NOP found that 31 per cent of card holders said the cards made a large difference to where they shop.

Individual schemes all share the same basic rules, although details vary. The supermarket group Somerfield gives shoppers one Premier point for every pound spent, rising to five points for pounds 1 on total purchases over pounds 10. Points are recorded on a plastic card and can be exchanged for goods at Argos stores. It takes 2,500 points to earn pounds 5 of spending power, but Somerfield claims a 90 per cent collection rate. BP offers four Premier Points per litre of petrol, so you have to buy 625 litres to earn pounds 5, an average return of just over 0.1 per cent.

Barclaycard holders receive one Profile point for every pounds 10 they spend on goods and services bought with a Barclaycard, and over the years many thousands of card holders have accumulated 5,000 points or more. One card- holder is said to have accumulated 60,000 points after spending pounds 600,000 with Barclaycard.

For the 10th year running Barclaycard's Profiles catalogue will be dropping through letter-boxes during the course of the next week or so, offering a choice of more than 500 offers, ranging from pounds 100 off the price of a new Ford car for 200 points, pounds 100 off Virgin holidays for 1,000 points, a day at a health spa for pounds 10 and 2,500 points, free video rentals from Blockbuster for 290 points and six months' connection to the internet with 18 hours free talk-time via BT for 900 points.

For 500 points customers can get a Cellnet package including a BC2 handset with a special button connecting callers to Barclaycard customer services, free connection to the network, 20 per cent off standard local and national calls and double points on future purchases via the Cellnet phone. A nominal pounds 10 plus 1,500 points buys a return flight to Amsterdam.

The catalogue offers two seats for a West End show, followed by dinner, wine and cabaret for 5,400 points, 12 minutes in a dual-controlled glider for 1,050 points, a Raleigh mountain bike for 7,000 points or a child's bike for 5,500 points. You can get six bottles of wine for 900 points, a Flymo hovermower for 3,100 points or a Hinari breadmaker for 3,500 points. There is also the chance to donate points (minimum 190) to the Variety Club Sunshine Coach charity appeal.

New offers this year include 25 per cent off a year's private medical cover premiums with Bupa for 500 points and a bungee jump over the Thames for 2,400 points. You can get Cellnet accessories such as an in-car charger for 390 points, a hands-free kit for 600 points, and Cellnet TrafficLine which provides warning of motorway congestion ahead, for 900 points.