EARNING REWARDS as you spend money on your credit card is an attractive proposition, and there are now a variety of reward schemes available to Irish customers, writes FIONA REDDAN

Although not as generous as similar schemes in other countries, Irish credit card users can collect rewards varying from cash back on purchases and free flights, to cheaper insurance and money off groceries.

Unlike store cards, which often have interest rates which are over double the standard charge levied by regular credit cards and can only be used in a particular store, rewards are associated with either Visa or MasterCard, and can therefore be used anywhere these brands are accepted.

In Ireland, many of the schemes are operated by credit card specialist MBNA.

However, before you start signing up for several new cards with the aim of earning rewards, you should remember some simple guidelines.

The Government charges an annual stamp duty of €30 on all credit card accounts – the more credit cards you have, the more expensive your charge will be. Secondly, some cards may also charge an annual fee, so any savings you make may be diminished by the cost of this fee.

Thirdly, many of the cards on offer charge high interest rates, despite low introductory offers. For example, Stein Travel’s MasterCard levies interest at just 1.9 per cent on balance transfers for the first 10 months. After this however, the rate climbs up to 16.9 per cent, which is much higher than the rates available on cards which do not offer rewards, such as the 8.5 per cent rate available on AIB’s Click credit card. So if you are attracted by the rewards, be sure to pay off your debt each month to avoid high interest charges.

And finally, don’t be tempted to spend more money on your credit card just to build up extra points or rewards. If you are still in the market then for a new credit card, what are the options available?

GET MONEY BACK ON YOUR GROCERIES

If you sign up to a Tesco credit card, you can get money back on your groceries, hotel stays and restaurants. Working in tandem with Tesco’s Clubcard, the credit card can be used in any location which accepts Visa.

For example, for every €2 you spend in Tesco you will earn three clubcard points, double the points compared to cash, cheques or Laser. When you use the card in other locations, you will earn 1 point for every €2 spent.

The vouchers you earn can be used against purchases in any Tesco store, so you can get money off your weekly shop, or you can use them on clubcard deals, where you'll get four times their value in deals tokens. Options include a one-hour skiing or snowboarding lesson at Sandyford Ski Centre, entry to amenities such as Dublin Zoo, subscriptions to a variety of magazines including the Irish Gardenand Food & Wine, as well as money off hotels and restaurants.

So, for example, if you spend €120 on your weekly shop and use a Tesco credit card to pay, you will earn 180 points. Similarly, if you pay for €350 in purchases outside of the supermarket with your card over the course of a month, you will earn an additional 175 points. In one month then, you would have earned 895 points which would entitle you to a subscription to House & Homefor example, or entry for two children to Dublin Zoo.

Pros:Groceries are an essential purchase, so why not earn as you spend?

Cons:Because of the points on offer if you use your credit card, you may be disinclined to shop elsewhere, even if it is more convenient or cheaper.

REDUCE THE COST OF YOUR INSURANCE PREMIUMS

Insurance firm Axa offers a gold credit card, which entitles you to collect points which can then be used to get money off Axa insurance policies.

You will earn one Axa point for every €2 that you spend when you use your Axa credit card for purchases, and each point earned will reduce your insurance premium by one cent. In addition, once you make your first credit card purchase, you will be credited with 4,000 free points, which you can use to reduce the cost of either your home or car insurance policy by €40.

You cannot redeem Axa points until eight weeks after you have first used your Axa Gold Credit Card.

Pros:With the cost of insurance on the rise, such a card might help you beat inflation.

Cons:You might get cheaper insurance elsewhere, even without the rewards discount.

SAVE MONEY ON HOLIDAYS

In many countries, credit cards which allow you to build up air miles are available. For example, in the United States, Aer Lingus offers a rewards credit card which enables you to collect points that can be used to earn free flights.

The airline doesn’t offer this product on the Irish market, but there are some other travel alternatives.

Perhaps the most well-known rewards credit card scheme is that operated by Ryanair, which promises you a free return flight when you sign up for the card. To qualify for the flight, you must use your card within 90 days of the account opening date, and there are some other restrictions.

For example, only a certain number of seats on individual routes and flights will be eligible under the scheme, so you may not be able to use the free flight when you wish and on the route you wish.

Moreover, travel is not permitted during July and August, and you must avail of the flight within eight months. Of course, you must also pay taxes and charges, which are often the most expensive element of the flight.

You can also earn additional bonus flights if you spend at least €2,000 in a calendar quarter, or if you buy five Ryanair return flights in the first or second half of the year, using your Ryanair credit card.

Another option is to consider a Stein Travel Mastercard, which gives you a discount of 5 per cent on all holidays and flights booked with the travel agent.

Pros:If you're a frequent flyer, you could earn several extra free flights.

Cons:Free flights don't include taxes and charges, often the most expensive part of the trip.

CASH-BACK ON PURCHASES

If you’re looking for cash back on your credit card purchases, you might consider AIB’s Platinum Card, which offers a 0.5 per cent cash back.

So, if you spend €20,000 on your card in a year for example, you could expect to get a bonus of €75 – enough for a meal out or trip to the theatre.

However, the cash-back only applies on purchases over €5,000 in a 12-month period, so you would need to be spending fairly significant sums for this card to be worth while.

Pros:If you're a big spender, you could get a proportion of all you spend back.

Cons:Cash back only applies on purchases over €5,000.

EARN FREE SONY GOODS

If you’re a frequent purchaser of the latest gadgets, the Sony Card, which entitles you to savings on its range of entertainment goods, including televisions, DVD players and computers, might be for you.

Every time you use your card you will earn reward points, which can then be used to redeem Sony products. For every €1.50 spent on card purchases, you will earn one reward point, or as Sony calls it, a “pulse beat”. When you use your card to buy products from Sony you can claim triple “pulse beats”.

Moreover, when you sign up for your card, you will receive 2,000 points if you use your card within the first 90 days, which you can use to claim a free CD, DVD or a Playstation 3 game, or save to put towards a more expensive item.

So if you spend €4,000 on general purchases and €500 in a Sony store, you will collect 3,666 points, which can then be exchanged for a personal radio, or earphones, for example. Sony has more than 600 products available under its rewards programme, including the new Sony Reader, which enables you to store and read books digitally and which can be yours for 31,700 pulsebeats, while a 2GB Walkman requires 6,600 points, and a range of movies for 1,500 points.

Pros:By paying for your family holiday with a Sony credit card, you could earn yourself a new DVD, CD, or even walkman, depending on how expensive it is.

Cons:As the SonyCard is issued by MBNA, you can't transfer a balance from another card issued by them.

GET FREE DVD RENTALS

Pigsback.com, an online club of consumers and brands, offers points on certain purchases, which can then be used to claim rewards. The website also has a credit card, which enables users to earn extra “PiggyPoints”. For example, you will earn one PiggyPoint for every €2 spent on the card, while you will receive 2,000 PiggyPoints when your account is opened and you make your first card purchases.

PiggyPoints can be used to claim a variety of rewards. For example, to get a €10 voucher for restaurant TGI Friday’s, you will need to collect 900 points, while 4,500 points will get you a €50 Essensuals hair voucher, and 400 points will give an adult free entry to Duffy’s Circus.

Pros:Just by signing up you could get four free DVD rentals at XtraVision.

Cons:An interest rate of 19.9 per cent is levied on cash transactions.

PAY LESS FOR YOUR JIMMY CHOOS

Another credit card rewards scheme is operated by upmarket department store Brown Thomas. Holders of its card can expect to get 3 per cent back on purchases in both Brown Thomas and BT2, and a €40 Brown Thomas gift card upon activation of the credit card in the store, as well as up to 25 per cent back on a host of other services under the Encore Rewards programme.

So, if you spend €500 on a pair of Jimmy Choos, you will get €15 back in BT vouchers, while you can also collect rewards by using the card with BT’s rewards partners which include hotels, restaurants and beauty salons.

For example, at the Ritz Carlton Powerscourt, you will earn 5 per cent back when you pay using your Brown Thomas MasterCard. In addition, all MasterCard holders will be upgraded to a suite with a mountain view.

An added incentive of the Brown Thomas card is that you might be invited to glitzy events such as pre-sale shopping and customer evenings. For example, the department store is currently inviting holders of its Mastercard to enter a draw to win a trip to the Goffs Millions Race Day at the Curragh Racecourse on September 27th. The prize includes three nights’ accommodation in the K Club, as well as lunch in the Brown Thomas Champagne Bar.

Pros:Get the best discounts at pre-sale shopping evenings.

Cons:The BT card has one of the highest APRs for a rewards credit card.

Rewarding loyalty: what the schemes offer

Tesco:Collect 1,400 points and you can bring a family of two adults and two children to Cineworld cinema in Dublin for free.

AXA:Collect 2,500 points and get €25 off your home insurance premium.

Ryanair:Get a free flight to Paris (not including taxes and charges).

Brown Thomas:Buy a pair of Jimmy Choos and get a €15 BT gift card.