Stingy rewards: Credit card programs not giving enough

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Jack Han reports on the incentives that are really on offer from some rewards programs.

February 3, 2010

Some credit card users are not getting as much out of their rewards program as they thought, according to a new study. This has raised concerns about the value of paying premium fees for cards with rewards programs, which will no doubt change the way consumers compare credit cards.

A study completed by consumer welfare group CHOICE has found that some rewards programs return less than a dollar for every $100 spent. In a comparison of the two leading supermarket rewards programs, the study found that consumers will need to spend more than $15,700 at Coles on FlyBuys points and over $11,000 on Woolworths Everyday Rewards card to earn enough points for a $50 voucher.

On an average shopper spend of $156 per week in supermarkets; the research discovered that Australians will only be saving 50 cents a week with FlyBuys, and 70 cents a week with Everyday Rewards.

Also based on this weekly supermarket expenditure, it would take almost seven years to save enough FlyBuys points for a Qantas Sydney-Melbourne flight, excluding taxes and other fees. However, because points expire after three years, this becomes unachievable.

When the rewards are so low, consumers should try to find other ways of saving. In this case, shoppers will find that they can make more savings by purchasing one less item a week, or switching to cheaper brands and stores.

On the upside, some shoppers argue that they spend much more per week than on just their grocery shopping, thus earning themselves more rewards. However, the issue at hand is that they are still earning the same rate of rewards points, but simply spending more.

By comparing rewards credit cards with non-rewards cards, rewards programs include interest rates that are 4 or 5 percent higher than their non-rewards counterparts. Rewards programs also tend to attract higher annual fees, according to RateCity’s extensive database of financial products.

In the end, it is up to each consumer to decide whether their rewards programs are worth the extra fees and rates, and whether it is worth spending more on their weekly shopping to gain the extra vouchers.  All Australians should be comparing credit cards and rewards programs to find the best rewards, and finally make their shopping dollars worth their buck.


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