Credit card perks 'of little use'

The perks and added extras that are traditionally used to sell credit cards are "of little use" and should not determine your choice of card, according to industry experts.

Recently many card providers have been withdrawing traditional offerings, including purchase protection insurance and travel accident cover, as insurance rules change and the cost of offering such benefits increases.

Over the last few months Halifax, Sainsbury's Bank, Lloyds TSB and HSBC have withdrawn purchase protection cover while Barclaycard has also dropped all other insurance benefits, Moneysupermarket.com revealed earlier this year.

Today price comparison website uSwitch.com found that the remaining offers have less to recommend them than the old ones.

"Credit card providers have historically used perks, such as car breakdown cover and annual travel insurance, to entice people into applying for their cards. But now that many providers have withdrawn the more valuable benefits, those remaining are, in reality, of little worth," said Nick White, head of personal finance at uSwitch.com.

"Only a limited number have a tangible value - in terms of discounts, if you go on holiday frequently or buy CDs, these might be also worthwhile. One thing to be aware of, however, is that these discounts are usually only available at selected places, and if you had the inclination to shop around (especially for holidays and flights) you could probably find bigger discounts," he added.

But the credit card industry has rejected claims that new benefits are worth less than the old ones.

Halifax told MyFinances.co.uk it was very unlikely that changes in its benefits would affect customers, as the old ones were "pretty much unused".

"Over the last five years the number of claims on these [insurance] policies can be counted on your fingers," a spokesperson told MyFinaces.co.uk.

Barclaycard added that its changes were designed to benefit its customers and not to save money.

The card provider told MyFinances.co.uk that it undertook customer research before altering the policies it offered.

Peter Crook, Barclaycard UK managing director, said of the changes: "We want to offer services which appeal to as many of our cardholders as possible and more importantly, which provide them with the right support and protection when it's needed the most."

uSwitch.com's Mr White added: "As a general rule, consumers should look to see if they are getting the best package from their provider for their lifestyle.

"If you rarely use any of the perks included, think about what you actually require from a credit card, and consider other types of rewards that credit cards offer such as cashback or reward points. It's easy to switch if your current card does not meet your needs."