Only a third of cardholders claim loyalty rewards

A report from Morgan Stanley Consumer Banking Group has revealed that the majority of consumers who use a credit card which offers a loyalty scheme such as reward points, air miles or cashback, fail to redeem their rewards.

The study found that only 32% of credit card holders with a loyalty scheme have redeemed points, air miles, or received cashback in the past three months. Furthermore just 9% of people with air miles entitlement have redeemed free flights in the past quarter.

The survey of 4,000 card holders in the UK revealed the Goldfish card, which is part of Morgan Stanley, to be the card users most frequently claim their rewards, with 46% of card holders claiming their rewards in the past three months. In the same period 29% had redeemed Nectar rewards via their American Express cards.

Patrick Muir, spokesman for Morgan Stanley, remarked "Credit card reward schemes can be a great way for cardholders to be rewarded for everyday spending, but there's no point in having one if customers do not redeem their points. Savvy spenders should consider how useful the rewards actually are and how easy they are to redeem."

The report also revealed a large difference in the average value of different reward based credit cards. American Express Nectar was found to have the lowest value reward redemption - £45 over three months - while Airmiles had the highest at £157. Cashback came in at a typical £72 over the past three months, while Goldfish rewards had an average value of £64. .

In recent months many credit card companies have cut back or terminated their reward schemes. Barclaycard, Egg, Nationwide, the Royal Bank of Scotland, Bank of Scotland, Halifax and Sainsbury's Bank are among those to abandon or limit the benefits of loyalty schemes.

If you always pay off your credit card bill in full each month, it certainly makes sense to earn some free cashback or reward points. You can earn up to 2% cashback with a Morgan Stanley Platinum card, but remember to claim your benefits!