Stakes are raised in the battle for credit card loyalty

GE Money is offering a credit card with the best cashback on the market: 3 per cent back for the first £5,000 spent each year on groceries and petrol, 0.5 per cent on everything else and 0.5 per cent for any annual spend over £5,000. It has an APR of 12.9 per cent. And BMI has just launched a card that gives new users 20,000 air miles. It has a balance transfer rate of 1.9 per cent for nine months which reverts to an APR of 15.9 per cent.

Almost half of all credit card issuers in Britain now offer a loyalty scheme as they try to stem the tide of customers switching cards when a cheap interest rate comes to an end or owning a card but not using it, according to data analysts Total DM. A report from Morgan Stanley Consumer Banking Group showed that almost half of all British credit cardholders now take advantage of a loyalty scheme attached to their credit card. It also pointed out, however, that eight credit card companies including Royal Bank of Scotland, Halifax, Mint and Barclaycard have downgraded their schemes in the past 14 months and that less than half of loyalty card holders redeem the rewards on their card.

GE Money: www.gemoney.co.uk 0808 208 1149. The BMI credit card is operated by MBNA: www.mbna.co.uk 0800 062 062.

Big balance doesn't pay

Savers with £25,000 or more in deposit accounts should not assume they are being paid high rates of interest just because they have a larger balance.

Investec Private Bank's latest savings index shows that in the first quarter of the year the average rate paid on balances of £25,000 was 3.46 per cent. More than a quarter of the accounts reviewed paid less than 3 per cent, 14 more than the index results for the last quarter of 2005. Over one in 10 accounts paid just 2 per cent, meaning savers effectively earn nothing, as this is the rate of inflation.

'Tiering, where banks and building societies offer better rates to savers who deposit more money, is phasing out,' says Susan Hannums, savings expert at Chase de Vere Investments. 'The best rates for savers with £25,000 or more are often the same as those for people saving £1.'

For those prepared to give 40 days' notice to withdraw their cash, the Chelsea building society is paying 5.1 per cent which includes a 0.6 per cent bonus for 12 months. But Hannums says her favourite account for its simplicity is from the Anglo Irish bank, which is paying 4.8 per cent on a minimum balance of £500 and can be operated by phone or post.