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My free holiday every year with savvy credit card spending

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For the past three years, Nellie Morley has taken her two daughters to the South of France — for almost nothing.

Mrs Morley, a former property worker, is not a whizz at competitions. Neither is she lucky in prize draws. Rather, she is simply a savvy spender.

That’s because Mrs Morley tries to make sure every pound she spends earns her loyalty Avios points — 27,000 to be precise. Once she has enough, she cashes them in for flights to Nice, which allows her to take daughters Jessica, 13, and Alex, ten, off on holiday.

In the money: Nellie Morley and her daughters Jess, 13, left, and Alex, 10, right, pictured at their home in Chiswick, go to the South of France every year for virtually nothing thanks to savvy saving

Holiday for free: Being clever with your credit card can mean big rewards such as annual holidays to Nice, in France, like the Morley family

To build up this huge balance of points, Mrs Morley uses her Lloyds TSB Duo Avios American Express and Mastercard credit card whenever she can — paying off the bill in full every month. And she uses a Tesco Clubcard to build up extra Avios points on top.

Like many mums, she can spend as much as £2,000 a month on the card.

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‘Everything is so much more affordable for us and we wouldn’t be able to go on holiday as much as we do if I hadn’t been collecting Avios. We don’t have to think twice about travelling,’ she says.

‘This way we are getting something back for the money we spend. I’m saving my points for the girls and me to go for a break in New  York.’

Mrs Morley is not alone — increasing numbers of cash-strapped families are turning to loyalty and cashback cards to make their spending go further.

Increasing numbers of cash-strapped families are turning to loyalty and cashback cards to make their spending go further

Here, Money Mail shows you how:

LOYALTY CARDS

The five largest schemes are Avios, Nectar — which most shoppers associate with Sainsbury’s — Boots, John Lewis Partnership and Tesco Clubcard.

Each scheme rewards their most regular shoppers differently.

NECTAR

Nectar is by far the largest loyalty scheme and has 18.5 million customers. You can earn points by using your card in Sainsbury’s, when paying household bills, buying petrol and online at more than 500 retailers.

Normally every £1 you spend gets you two points — though you can  boost this by taking advantage of promotions.

You can earn extra points by using a Sainsbury’s Nectar credit card or a Sainsbury’s Gold credit card — which normally give you one point for every £5 you spend outside Sainsbury’s. Inside Sainsbury’s, that rises to two points for every £1.

So if you pay using your Sainsbury's credit card and present your Nectar card — known as double-dipping — you earn four points for every £1 you spend. However, you can do this only for the first two years.

The fastest way to collect points is with the separate Nectar credit card where you can double-dip at all Nectar partners and that way you get up to 4 points for every £1 spent.

You can also get one point for every pound spent on your card elsewhere and 500 extra points for every £500 you spend on your card each month.

You can redeem points by getting money off your Sainsbury’s shopping bill or saving money at numerous stores including Argos, Homebase and Blockbuster.

One trick with Nectar is to use points for family days out at linked attractions such as Legoland or the Orient Express.

Nectar card holders can also book easyJet flights with their points — even at peak times.

TESCO CLUBCARD

Tesco Clubcard has 16 million customers, works in much the same way as Nectar, but the main place you can earn points is shopping in Tesco.

You get one point for every £1 you spend. A £100 trolley of shopping will earn you £1 in your pocket — the same as Nectar.

Using a Tesco Clubcard credit card also earns you points: one point for every £4 you spend outside Tesco and five for every £4 spent in store, including on fuel at its petrol stations.

Tesco translates points into vouchers to use for in-store shopping or various rewards, from holidays to driving lessons.

AVIOS

Avios or Airmiles as it was known, has 2.2 million collectors.

Shoppers can earn points by using their card at various stores or by booking flights with British Airways. And Tesco shoppers can exchange clubcard vouchers for Avios points — £2.50 in vouchers is worth 600 points.

You can earn more Avios points by having a Lloyds TSB Avios Duo credit card. This is a credit card account that has an American Express card and a Mastercard. You get one bill and one credit limit for the two cards.

The reason for the two cards is that, though you earn one point for  every £1 spent with the Amex card, it is not as widely accepted as  Mastercard — particularly outside cities.

The Mastercard earns one point for almost every £5 spent.

You can build up points and then cash them in for flights, accommodation and other holiday perks.

However, a frequent criticism in the past of Avios has been that the number of seats on each flight is limited, and in the school holidays families find it nigh on impossible to use their points.

Also, despite being so-called ‘free flights’, for those wishing to travel outside Europe you have to pay the taxes and charges — sometimes nearly as expensive as the flights.

BOOTS

The Boots loyalty card, which has 17.8 million collectors, is the most generous scheme.

For every £1 spent you get four points, which means a £100 basket of goods will earn you £4 future discounts.

You can also collect points through Boots online, where they have partnered with retailers such as Mothercare, Lakeland and Comet to save you at least one point for every £1 you spend.

JOHN LEWIS

The John Lewis Partnership Card has 580,000 collectors. It technically works in the same way as a cashback credit card, only it sends you in-store and online vouchers for the shopping you do in John Lewis or Waitrose.

Every £1 spent in either store earns one point and shoppers can also earn one point for every £2 spent out of store. You will be sent vouchers three times a year.

And remember, there is a price for your loyalty. The reason companies run these schemes is so they can get marketing information about you and use it to try to sell you things you might not want.

CASHBACK CARDS

These cards give you cash in hand for every penny you spend. For big spenders, this can be considerable.

You need to be disciplined and make sure you don’t spend more than you can afford to pay off your bill in full every month.

If you don’t, the interest and charges will far outweigh the value of the cashback.

Typically, you get back between 1 per cent to 3 per cent on spending and this is paid to you once a year, either into your account or sent by cheque.

So, if you spent £1,000 over 12 months, you could get back up to £30.

You can earn different rates depending on where you spend your money.

With the Santander 123 credit card, you get 1 per cent cashback on spending in the supermarket, 2 per cent cashback on spending in department stores and 3 per cent on fuel.

The card has an annual fee of £24, so you need to spend £2,400 to make it worthwhile.

American Express Platinum Cashback Card offers 5 per cent to start for the first three months, followed by a rate of up to 1.25 per cent. However, some stores don’t accept American Express.

The Capital One Aspire World card pays 5 per cent cashback for three  months, and after that it pays 0.5 per cent on spending up to £5,999, 1 per cent between £6,000 and £9,999 and 1.25 per cent on spending above £10,000.

The AA credit card gives members 4 per cent in vouchers for AA products, 2 per cent vouchers for High-Street shopping or 1 per cent cashback.

The five golden rules of loyalty cards

1. You need commitment and discipline.

2. You must shop in the same places regularly and always use the same cards to pay.

3. Pick a scheme that will suit your lifestyle — not one that requires you to go out of your way to use.

4. Pay off your bills on time and in full every month — otherwise any benefit you have got could soon be eaten away by unnecessary payments and charges.

5. Double-dip — by using a loyalty card and a credit card together



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