Do you really need all those double Nectar points being advertised on TV every night?

Can a Virgin card really mean cheaper DVDs? How many Air Miles do you need to slash travel costs?

These are key questions for consumers as retailers and credit card companies increasingly turn to "rewards" schemes and cashback to boost turnover.

The British economy depends on spenders but the sharp slowdown in the High Street was confirmed over the Easter weekend.

Sainsbury's, which spent £40 million launching Nectar points in September, has a major TV advertising campaign under way offering double points until Wednesday at major retailers including Sainsbury, BP, Debenhams and Threshers.

Thresher pays double points over £10; Sainsbury on a minimum £25; Debenhams on a mere £1. Nectar points buy cut-price flights, meals at McDonald's, family days out at Whipsnade Wild Animal Park - or simply a discount on groceries at Sainsbury's.

Ford and Vodafone are also signed with Nectar. But purchases from them won't earn points until Nectar announces a starting date in the summer.

Rivals see Nectar's campaign as a sign that its much-hyped launch has run out of steam.

But Sainsbury's Bank claims it has already awarded customers some 616 million points - worth more than £3 million against subsequent purchases.

Air Miles, launched in 1988, is a market leader in rewards schemes. More than 500,000 new collectors signed up in 2002 alone and more than 500,000 flights were paid for entirely in Air Miles.

Natwest and Royal Bank of Scotland credit cards are the only major banking groups offering Air Miles.

By "double dipping" with named retailers like Tesco and Shell, collectors get one Air Mile for every £10 spent on their credit cards - instead of the usual rate of one for every £20.

Reward schemes can cut energy bills too.

Yesterday, Goldfish, the financial servives provider in the Centrica empire, waived its maximum redemption limit of £75 against British Gas electricity and gas bills.

The minimum redemption level - unchanged at 500 points - gets £3.33 off the bill.

Plenty of credit cards pay an automatic 0.5 per cent cashback on spending.

MORE TH>N, the direct financial services arm of Royal & Sun Alliance, offers an 0.8 per cent cashback on all purchases and enables customers applying online to design the type of card which suits their spending profile.

Alliance & Leicester handed back almost £20 million last year to banking customers, depending on how much they spent. Cashback on the Premier account card is one per cent on sums of between £4,000 and £20,000 spent during the year.

Sainsbury's Bank hands out Nectar points for products, rather than spending: A motor policy comes with 1,000 Nectar points and the same number goes to homeowners who take policies for buildings and contents insurance.

Travel cover bought before May 31 earns another 500 points.

Co-op Bank has launched a reward card through its Travelcare agencies on the High Street -- every pound spent gets a Travelcare point to pay for flights, holidays and services linked to holidays.

These schemes, and plenty more like them, attract consumers with the collecting instinct.

But are they worth all the homework required to find the best deals?

Not necessarily.Which? magazine surveyed reward schemes in its March issue and found, for example, that Nectar collectors must spend £12,000 to qualify for the cheapest flight to Amsterdam. They would still pay £31.90 for a flight worth about £70.

Which? said: "Overall, points schemes offer poor value. Most give back less than one per cent of what you spend.

"Points schemes give consumers between £25 and £50 back on every £5,000 spent."

It tipped the Virgin card - offering points redeemable at Virgin's online store on books, CDs, DVDs, days out and computer games - as the best buy because it charged only 10.9 per cent interest on users who failed to settle accounts in full each month.

The web site moneysupermarket.com also publishes a regular survey of reward schemes.

Its best-buy credit cards include American Express Blue, Capital One Circle and Nationwide Cash Reward, all paying one per cent - though Nationwide slips to 0.5 per cent after six months.

Stuart Glendenning, of moneysupermarket.com, said: "Loyalty cards and cashback schemes are the result of tough competition in the credit card sector.

"More than 40 cards offer zero per cent on balance transfers for a specified period so providers need other benefits to stand apart.

"Both loyalty cards or cashbacks are best suited to people who pay off the balance in full during the interest-free period.

"It makes sense to use cards for shopping, petrol purchases and business expenses and collect one per cent cashback from Amex or Capital One.

"If you don't pay off the balance to avoid interest, you need to look much more closely at interest charged on outstanding balances.

"In many cases, interest charged far outweighs any benefits to be gained in cashbacks."

Mr Glendenning also believes cashbacks invariably provide a far better return than points schemes.

He said: "With cashback, you know what you are getting and how much it is worth.

"The value of points is so variable nobody knows their value."

In boom times, it was easy to overlook schemes which promised a little extra saving.

As economic prospects darken, loyalty schemes could be worth a closer look.

Sainsbury's Bank 0500 405060
MORE TH>N 0800 3164460
Goldfish 0800 885555
Nectar details on www.nectar.com
See also moneysupermarket.com
*Friday May 2 2003