Barclaycard prepares to launch revolutionary reward scheme

Barclaycard has revealed details of its plans to launch the country's "broadest ever retail rewards scheme" in March.

The 'Barclaycard Freedom' scheme has been branded as "a reward scheme like no other", offering the company's 8m cardholders the chance to earn rewards for their spending that can be exchanged for goods and services in a wide range of shops, restaurants and online outlets across the UK.

Thousands of retailers across the country have already been invited to sign up to the programme, which means more places for cardholders to earn and redeem rewards.

Experts said this new method of rewarding customers, which will reward in pounds and pence on their current Barlaycard credit cards rather than the traditional vouchers, could "revolutionise" cashback credit cards, which has taken a big hit over the last five years.

Barbara Scottu, credit card expert at Which4U, said: "If enough high-street and online retailers are willing to join the scheme, this simple yet improved reward scheme could revolutionise the cashback credit card market as we know it."

Just 1 in 20 credit cards on the UK market currently allow users to earn cash on the purchases they make, down from more than a quarter of all cards five years ago, according to financial information group Defaqto.

Furthermore, the cashback reward schemes currently on offer have become increasingly complicated, often meaning that customers must rely on higher rates during an introductory period to make significant benefits as well as changing rates depending on how much is spent each year and caps on the amount of cashback that can be earned.

Defaqto said providers were facing higher costs and had suffered from cuts in revenue, for example, through the sale of controversial payment protection insurance, resulting in them having to cut back on the benefits offered.

David Black, banking specialist at Defaqto, said: "For those who always repay their entire outstanding credit card balance each and every month, it makes a lot of sense to use a credit card that offers a reward.

"Credit card providers are facing a number of hits on their established income streams and I regard it as inevitable that credit cards on offer will become less attractive as the providers seek to regain the lost income in other ways and also cut back on the cost of reward schemes."