Warning over loyalty scheme top ups promising rewards that could actually leave you out of pocket
LOYALTY cards can be a great way to earn rewards for shopping – but experts are warning about the risks of schemes that allow you to top up cash onto a card or app.
Most schemes, such as the Nectar and the Boots Advantage Card work by allowing you to collect points or stamps.
These can then be converted into vouchers or money that you can spend in store, or elsewhere.
Others, such as the MyWaitrose card work by offering members discounts throughout the store, meaning you get your shopping more cheaply.
Some, like the Tesco Clubcard, do both.
But there are a few brands in the UK now that also offer cards where you can pre-load cash to spend in store or online.
Typically, this feature is offered alongside other benefits such as point collection or discounts – but adding your own money to a store reward card can be risky.
Consumer rights expert, Martyn James says: “Loading some cash on a loyalty card might seem like a practical idea, but there are loads of traps that could eat into your cash.
“From dormancy charges and hidden fees to cards expiring and wiping out your money, it’s so easy to lose out.”
Andy Webb, money expert at Be Clever With Your Cash added: “There are some decent schemes out there for customers who are particularly loyal to one retailer.
“For example, Iceland offers a hybrid-type card – it’s part loyalty card and part saver scheme.
“However, any type of prepaid card comes with some risks. If you lose your card, it can be spent by anyone who finds it or if the retailer goes bust you may end up being out-of-pocket.
“But the most common issue is that you are limited to spending at that retailer as you may not be able to get the money back once it’s loaded on.
“That’s why you need to be sure you shop at that retailer regularly enough to be able to make use of the benefits before signing-up.”
The risks of loyalty scheme cash top ups
The risks vary by loyalty scheme, as each will have its own terms and conditions, but there are several key things to check for before you transfer money across.
One is that many of these schemes will not allow you to withdraw cash once you’ve added it.
This could mean that if you’re in financial difficulties, you’ve got much needed cash sitting on an app that you can only spend in one store.
In extreme situations, if your money is tied up in a loyalty scheme, that might leave you unable to pay important bills like your rent or council tax.
Some schemes will let you withdraw the cash if you cancel your account, but others have rules saying that the money would be forfeit. Some will only refund you if the money is above a certain limit.
Another common problem is that many loyalty schemes say that they will cancel your account if it’s sitting dormant for two years. However, some add that in those cases you won’t get any money you’ve uploaded back.
Something else to consider is interest. If your money is sitting in a savings account until you need it, it will typically attract interest allowing it to grow over time.
Most loyalty schemes do not offer interest, which means if you’re leaving money sitting on them for a long period of time, you’re losing out.
For instance £100 in a saving account paying 5% would earn £5 a year, compared to nothing in your loyalty account.
If the company goes bust your money isn’t protected like with a bank, where deposits are guaranteed from the smallest amount up to £85,000 under the Financial Services Compensation Scheme (FSCS).
Some programmes are now offering auto top up, where you link your bank to the card so that every time your balance drops below a certain level money will be transferred across.
Supermarket loyalty schemes - which has one?
MOST UK supermarkets have loyalty schemes so customers can build up points and save money while they shop.
Here we round up what saving programmes you’ll find at the big brands.
- Iceland: Unlike other stores, you don’t collect points with the Iceland Bonus Card. Instead, you load it up with money and Iceland will give you £1 for every £20 you save.
- Lidl Plus: Lidl customers don’t collect points when they shop, and are instead rewarded with personalised vouchers that gives them money off at the till.
- Morrisons: The My Morrisons: Make Good Things Happen replaces the More Card and rewards customers with personalised money off vouchers via the app.
- Sainsbury’s: While Sainsbury’s doesn’t have a personal scheme, it does own the Nectar card which can also be used in Argos, eBay and other shops. You need 200 Nectar points to save up £1 to spend on your card. You need to spend at least £1 to get one Nectar point.
- Tesco: Tesco Clubcard has over 17million members in the UK alone. You use it each time you shop and build up points that can be turned into vouchers – 150 points gets you a £1.50 voucher. Here you need to spend £1 in Tesco to get one point.
- Waitrose: myWaitrose also doesn’t allow you to collect points but instead you’ll get access to free hot drinks, and discounts off certain brands in store.
While this might be convenient, it runs the risk that money you need could be moved at the wrong time, leaving you short.
Other things to check carefully in the terms and conditions of a loyalty card that allows you to load cash include:
- Rules if your card is lost or stolen
- What happens if the balance on your card is wrong
- Rules around how and when the company can cancel or withdraw your card
- Dormancy fees, or expiration rules if a card or app isn’t used over a certain period
- Whether you get your money back if you decide to cancel the card or scheme
- How and when cash can be spent, and if cards can be used in all stores
Loyalty schemes offering cash top ups in the UK
These are the three main loyalty cards that offer cash top ups:
Greggs – the pros
The Greggs app lets you earn stamps for items you buy in store. Each time you get to nine stamps, the next eligible item you buy will be free.
It includes a wide range of Greggs favourites including hot drinks, bakes, and even sweet treats.
The app also allows you to skip big queues by doing click and collect orders and even gives you a free coffee just for downloading it.
There are also regular promotions throughout the year including double stamps and free treats, and you’ll get something on your birthday every year.
As well as these rewards, the Greggs app allows you to upload cash, which can be used to pay in store or for click and collect orders.
It’s got an auto top up feature where you link the app to a bank account, credit card or PayPal.
You can then set it so that every time the Greggs balance dips below £5, an amount specified by you (such a £10) is added from your account.
Greggs says that balances will typically update quickly, but may take up to one hour to show in the app.
The good news is that you don’t have to add money to the Greggs app to enjoy its other perks, you can also pay with cash, debit or credit card or Apple Pay.
Greggs – the pitfalls
If you cancel your Greggs app account, it says that it will refund balances over £3, but if you have less than that, then you will forfeit the money.
If you’re claiming your cash back you can receive it as either BACS, cheque or gift-code to spend in shop, but Greggs says that it may have to carry out identity checks to return the money.
The bakery adds that it is not responsible for rewards or money lost due to lost mobile phones or misuse of passwords or codes.
But it says that you should immediately report any loss, theft, fraudulent or unauthorised use to the Customer Care team on 0808 1473447 to place a stop on your Greggs Account.
The Financial Ombudsman Compensation Service is not applicable to a Greggs Account and it does not take part in any other alternative compensation schemes.
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Sign up to loyalty schemes of the brands that you regularly shop with.
Big names regularly offer discounts or special lower prices for members, among other perks.
Sales are when you can pick up a real steal.
Retailers usually have periodic promotions that tie into payday at the end of the month or Bank Holiday weekends, so keep a lookout and shop when these deals are on.
Sign up to mailing lists and you’ll also be first to know of special offers. It can be worth following retailers on social media too.
When buying online, always do a search for money off codes or vouchers that you can use vouchercodes.co.uk and myvouchercodes.co.uk are just two sites that round up promotions by retailer.
Scanner apps are useful to have on your phone. Trolley.co.uk app has a scanner that you can use to compare prices on branded items when out shopping.
Bargain hunters can also use B&M’s scanner in the app to find discounts in-store before staff have marked them out.
And always check if you can get cashback before paying which in effect means you’ll get some of your money back or a discount on the item.
Iceland – the pros
The Iceland Bonus card allows you to save money and it gives you a £1 bonus for every £20 that you load.
Unlike other reward schemes, this means that you do get a return on your savings, working out at 5%.
However, it’s a one-off £1 bonus each time you reach the £20 milestone, so there’s no cumulative interest.
There are other benefits too, for instance by scanning your app at the in-store checkout, you’ll be entered into a draw to win £100.
If you spend over £25 in store you can also scan your app to book a free home delivery service, meaning no more heavy shopping bags.
Iceland – the pitfalls
Iceland says it reserves the right to withdraw, decline, cancel or issue a new card at any time and without notice. If your account is cancelled, the remaining balance will be lost.
If you choose to cancel the account you must make sure that any savings or balances on your Bonus Card are redeemed, otherwise you’ll lose the money.
Iceland also says that your Bonus Card will automatically expire 24 months after the last time you used it. Any remaining balance, of any type, will be forfeited and will not be retrievable.
Finally, Iceland’s terms and conditions says it will not be liable for:
- any bonuses that are not spent before expiry
- any bonus amounts which have failed to load onto the card due to a technical or user error
- any bonus amounts which are not used due to lost or stolen cards
- any computer or equipment failure resulting in lost transactions from a Bonus Card account, or any technical issues with address verification
If there is a technical failure or computer error it says it will restore the last recorded unused balance to the Bonus Card.
It’s also important to remember that the money on your bonus card can only be spent in Iceland stores or online where available. Not all Iceland stors participate in the scheme, so it’s worth checking with your nearest shop before you sign up.
A spokesperson for Iceland said: “The Iceland and The Food Warehouse Bonus Card is a massive hit with our customers, offering unique features such as a 10% discount for over 60s on Tuesdays, a 5% bonus when you top-up £20, and our Scan to Win competition, where customers who scan their Bonus Card app when shopping in-store have a chance to win £100 bonus pounds every day.
“All these features mean the terms and conditions are tailored to Bonus Card and designed to help deliver these great benefits. Our customer service team are also on hand should customers have any queries.”
Starbucks – the pros
The Starbucks app and card allow you to collect points (known as stars) and rewards for your spending.
You get three points for every pound you spend, and each time you reach 150 stars you get a free drink.
If you get to 450 Stars, you become a gold level member.
That means you get extra shots of espresso, selected syrups and whipped cream – all on the house.
At the gold level, you’ll also get a free drink on your birthday.
When you join Starbucks Rewards, you are automatically provided with a digital membership barcode and can request a Starbucks Card with a zero balance.
You can then add funds to your digital Starbucks Card either online at www.starbucks.co.uk/account, through the App, or in-person at a participating Starbucks store.
You can also set up auto-top up so money is moved across automatically.
Unlike with other reward schemes, Starbucks will refund you the money if you need, however it says this will typically take 30 days, and you could be waiting as long as 45. You may need to prove your identity to get the money back.
But it’s important to note that you can collect stars without a card, and instead choose to pay by bank card or credit card.
Starbucks – the pitfalls
You won’t get any interest on funds loaded on to a Starbucks Card, so you could be missing out if you’re leaving money on there for long periods of time.
If your Starbucks Card is lost, stolen or destroyed, the card can be replaced with the balance remaining on it when you told them, so it’s important to do this as quickly as possible.
A Starbucks spokesperson said: “Starbucks® Rewards members enjoy exclusive offers and rewards. Order ahead or scan your app in store, then pay using card, cash or your Starbucks Card.
“Amounts loaded onto your Starbucks Card can be redeemed by contacting our customer care team and no fee is payable.
“We do recommend customers register their cards to protect the balance, this way, if you lose your card or phone, your money will be safe.”
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