There is a significant disparity between the very best and the very worst in credit card reward schemes, and consumers are faced with confusing 'marketing speak' which could be misleading if they fail to read the small print before signing up, according to the 'UK Credit Card Rewards Report 2012' from Loyalty Consulting. This article is copyright 2012 The Best Customer Guide.

The report considered 56 credit cards that offer a reward scheme, and found that the best loyalty credit card pays out more than £3,000 worth of rewards when a member spends at least £12,000 over the course of a year, while the worst card offers rewards that don't even cover the card's annual fee.

"Credit card issuers increasingly offer some form of rewards as an incentive to apply for and or use their cards more. However, judging which one is best for the individual is complicated," said Loyalty Consulting's managing director, Mark Bergdahl.

Consumers have variable purchasing power and therefore the report focused on three annual levels of purchases: £2,000, £6,000 and £12,000. If the consumer consistently pays the credit card bill in full and on time each month, then there are considerable rewards to be had. For example, if you are a frequent flyer with either Virgin Atlantic or BA, it is possible to earn over £3,100 and £2,700 respectively (calculated based on the current value of the free flight rewards earned).

For consumers with less purchasing power the Aqua credit card offers by far the most rewarding card, giving the consumer a 3% cash-back return on all purchases up to a value of £3,333 - although the rewards are capped at £100 per annum.

The Supermarket wars extend to the arena of credit cards, with the launch of the Sainsbury's Cashback card and an improvement in rewards value for the Nectar credit card. Tesco was knocked off the top spot among supermarkets for all but the lowest levels of spend (£2,000 p.a.), with Nectar offering an average 1.25% return for higher purchases.

But most other cards offer much lower levels of rewards and, if the consumer does not intend to use the card frequently, the card could cost them money through the annual fees which can far exceed any rewards being offered for lower levels of purchases.

The report focused solely on rewards rather than other benefits or card features, but it did also take annual fees into consideration. Loyalty Consulting therefore warns that the consumer should always read the small print and, if credit is the primary reason for using the card, look for the lowest APR first because the rewards will almost certainly be less than the interest they would pay for using the card's credit facility.