FOOL'S EYE VIEW
Get Paid To Spend

By Cliff D'Arcy
November 27, 2003

Shopping: love it or hate it, it's something we all have to do (unless you fancy joining in with Buy Nothing Day). My problem with shopping is that it involves money going in one direction - out of my pockets and into the tills!

Of course, one Foolish catchphrase that I'm always trotting out is shop around and save, because there's a fortune to be made by resisting impulse buying and doing your research first. For example, this site shows all the special offers currently available at seven major supermarket chains. It's especially useful when you're buying in bulk, for example, beer or nappies!

On the other hand, there are other ways to save - or make - money, even without doing much in the way of shopping around. Here are three we've come up with.

1. Cashback credit cards

Cashback credit cards do exactly what it says on the tin: they pay you cash when you spend on them. However, they're really only suitable for those sensible shoppers who pay off their credit card bills in full every month - because the interest they charge is always much larger than the cashback they pay. As an extra benefit, with careful timing, these customers can benefit from up to 59 days' interest-free credit (see the table below).

(If you frequently borrow on your credit cards, you'd be better off with a card that doesn't charge interest on balance transfers and purchases for an introductory period. We list several in our Credit Card Centre.)

There are loads of cashback cards to choose from: independent financial researcher Moneyfacts alone lists 27. These refund between 0.5% and 1% of your spending, in the form of a cheque sent to you once a year. On average, we Brits spend around £2,000 per year per card but, depending on how much you spend, certain cashback cards may give you greater rewards than others. Here's why (annual cashback shown is on a monthly spend of £200 in year one):

Company - Card                    Cashback                  Int.-free period  Cashback
 
American Express - Blue Amex*     1% (2% in first 3 months)       56 days     £30
Capital One - Circle Rebate Card  1%                              54 days     £24
Morgan Stanley - Cashback         1% on first £2k; 0.5% on £2k+   55 days     £22
Accucard - CashBack               Up to 0.8%                      51 days     £19.20
Nationwide BS                     1% for 6 mths, then 0.5%        56 days     £18
Alliance & Leicester - MoneyBack  0.5% up to £20,000**            59 days     £12
 
* £15 annual fee, which you should factor into your calculations
** Double and quadruple MoneyBack at certain outlets.

As you can see, some card issuers put a cap on the cashback you can earn, others pay you more cashback the more you spend. So, if you're a big spender and play your cards right, say by charging £1,000 a month to your card, you could earn upwards of £120 a year from shopping. Note that American Express doubles its rate to 2% for the first three months, which could be valuable if you're planning any major purchases.

(We've just written a report on Best Buy cashback credit cards, which goes out next week, so watch this space!)

Of course, you can use your cashback card together with stores' loyalty cards for even greater benefits...

2. Loyalty and reward programmes

Here are three of the most popular reward schemes on the high street:

Nectar

You earn points by spending at various outlets, including Adams, BP, Debenhams, Sainsbury's and Thresher. Also, you can register your Barclaycard and earn points when you use it (although you'd be better off using a Best Buy cashback card instead). You can redeem 500 points for a spending voucher worth £2.50 at Sainsbury's, or you can get discounts off goods, meals, entertainment and so on.

The number of points you receive varies from partner to partner, but most outlets give you two points per £1 spent, which is worth 1% of your spending.

Clubcard

When you shop at Tesco, Tesco.com and Tesco petrol stations, you receive one point for every £1 you spend, with bonus points available on certain products. This works out at 1% of your spending. Points are also available from Tesco partners, which include Allders, Beefeater restaurants, Marriott hotels and Powergen energy.

If you have 150 points or more, you can exchange them for Clubcard vouchers, which can be spent in-store. Alternatively, you can exchange these vouchers for up to four times their value with Tesco partners, or for Air Miles.

Boots Advantage Card

When you shop at Boots, you earn four points for every £1 you spend - that's equal to 4% of your spending. As well as bonus points, Boots often has double or triple points periods, which can be worth up to 12% - almost one-eighth - of your spending. You can spend your points in-store or with Boots' partners.

For example, my local Boots store recently offered triple points if you spend £15 or more, so I bought a mountain of 'buy one, get one free' nappies and other essentials. So, not only were the nappies effectively half price, but I earned a further 12% in points, too!

3. Store savings stamps

Here's a wheeze I discovered at Tesco. Along with many other stores, Tesco offers a stamps-based savings scheme, similar to old-style Christmas clubs. If you collect stamps worth £48, you can cash in your savings book in December for £50 of shopping.

Often, these schemes can be very good value, but the trick is to buy all your stamps in one go in December. Then, you can immediately turn £48 into £50 - an instant return of 4.17%. So, if you're planning a big shop at Tesco next month, you could spend £200 but only pay £192!

More: Find a better Credit Card | Beware Of Christmas On Credit! | Twelve Easy Money-Saving Tips.