Rewards schemes offered by shops and credit cards have become an obsession for many shoppers. It seems like a no-lose proposition: spend your money at a certain retailer or through a particular credit card, and collect points that can be redeemed against a range of goods and services.
We consumers love to collect points – these schemes have been a successful marketing ploy as they allow the brain to justify spending more $ in return for some points. But are these schemes really worth it? Or can loyalty to one particular shop or group of retailers do more harm than good?
The short answer is that reward schemes should come with a wealth warning: you should not allow your rewards programme to dictate where you spend all of your grocery money – or any other shopping – because it will prevent you from benefitting from special offers at other stores. And these can provide immediate savings which easily outweigh a year’s worth of points collected at one particular store.
What is a point worth?
It can make sense to take out a loyalty card if you naturally shop at a particular group of retailers. Whether you ever get much out of it at any stage is a moot point. A good place to start is to evaluate what a single point from the most popular rewards schemes is worth.
Then you can begin to see if spending a fortune through that scheme will ever make financial sense, or if, as is sometimes the case, the points will have expired by the time you have enough to redeem them against anything worthwhile.
The Coles “Fly Buys” scheme allows you to earn points when you spend at Coles supermarkets and associated stores including K mart, Target, Travelworld, Bi-Lo and Liquorland.
Customers earn two points for every $5 spent (minimum spend $5). At Budget Car Rental they can earn two points for every $1.
It is a better scheme for people who tend to spend less at the supermarket because points are earned on every dollar spent subject to a minimum spend of $5 – and are not subject to a non-earning threshold of $30 like at Woolworths.
What do you get?
To redeem points, browse the online store for accommodation, restaurants, lifestyle products and more.
You need 2500 points to earn a $20 gift card, for which you would need to spend about $6300 a year at Coles.
However, certain flights and prizes will always be beyond your reach because the points expire if unused after three years from the date of accrual. A Sydney to Melbourne flight on Virgin Australia costing 11,000 points would take the average shopper 3 years five months to earn and therefore they could never collect enough points before expiry.
Shoppers can use their Everyday Rewards cards, a Woolworths everyday money credit card* to earn Qantas Frequent Flyer points which can be redeemed for a Woolworths gift card or at the Frequent Flyer Store for flights or other items such as iPods, magazine subscriptions and other goodies.
What do you get?
You need to be a big spender to make it worthwhile. Shoppers earn 1 Qantas frequent flyer point for ever dollar spent over a $30 minimum spend limit at Woolworths supermarkets, BWS and Big W stores. That means you won’t earn anything for popping in and buying a carton of milk – you only get rewarded for spending above $30.
Given the average supermarket spend is $156 a week, according to Roy Morgan, the research company, that could equate to 126 points a week, or 6552 points a year.
Browse the Qantas Frequent Flyer store to see what you could redeem those for and you won’t find much – anything in fact. You will need at least 28,000 points to earn a clock/radio ipod/iphone dock, which will take the average shopper over four years to earn.
The points only expire if there is no activity on your account for three years, but it may take nearly that long to earn a good rewards – a flight from Sydney to Melbourne, for example, will cost 12,500 points, and take the average shopper 99 weeks to earn if they spend $156 a week at Woolworth’s every week.
You can boost the accrual rate by spending your money on a Frequent Flyer-linked credit card, but you should be careful. The value of these cards varies and interest can be excruciatingly high if you do not pay off the balance in full each month, easily outweighing any gains through points you collect. The cards with the fastest accrual rates are listed in our article about Frequent flyer credit cards. Also read Which are the best credit cards?
Priceline Sister Club Card
Points are earned at Priceline stores after enrolling in their Sister Club. You earn one point for each dollar spent in a single transaction (minimum spend $5; prescriptions excluded).
Discount vouchers are posted quarterly. For a $100 spend in a quarter, you receive a voucher for 3 per cent of your previous quarterly spend on your next purchase. If you spend over $200, you receive 4 per cent of your quarterly spend.
This scheme at least gives a relatively fast cash discount for recent spend.
Run by Myer, with 65 affiliates nationally, including Darrell Lea and Air New Zealand.
With Myer One you earn two points for every dollar spent. At 2000 points, you get a $20 gift card, posted quarterly, so you must spend $1000 in a quarter to receive a $20 card – quite a high quarterly spend.
NEVER consider points over the price – loyalty schemes are designed to make you spend more by ignoring savings that you could take advantage of.
If you are saving points for a reward, consider the total cost of the reward and if your spend will actually get you there.
Read our article about best credit cards – but never use a frequent flyer-linked credit card unless you pay your bill in full every month. High interest rates outweigh any points.