Credit card points schemes may not be as great value as they appear

What do you get for your spending?

What do you get for your spending?


My Kiwibank MasterCard recently exited my pocket, falling many feet below in a pile of snow. I was on a chairlift (yes, we left New Zealand's gorgeous summer for a couple of weeks) and it flicked out when I reached for my over-sized phone.

The loss of the card was annoying (I never found it) but it was easy to cancel and I had a second credit card for emergencies. More annoying was that I collected more Airpoints using the Kiwibank card (one point for every $200 spent) than the emergency card (one point for every $250 spent). Ah, the tyranny of loyalty card schemes!

Is your credit card reward scheme really offering you a good deal?

Is your credit card reward scheme really offering you a good deal?

From rice cookers to shopping vouchers and credit card rewards, loyalty schemes claim to offer something to appeal to everyone, but before you set out shopping, do the maths. They may seem like a no-brainer but usually you have to spend up large before collecting a reward. The biggest reward is actually going to the retailer or service that operates them, in the form of data about you and your repeat custom.

At Consumer, we've recently looked at loyalty schemes and who really benefits. In one extreme case, we found BNZ Advantage Fly Buys customers were being offered a pony. They need only accrue 53,570 points – that's a $1.34 million spend at participating partner, New World. I wouldn't be thinking of riding boots for the kids any time soon.

READ MORE: Credit card mistakes that might be adding to your bill

What's in it for retailers beyond your repeat business is data and lots of it. There's the sign-up information – date of birth, gender, contact details, preferences and interests. And there's more oblique stuff – what payment types you use, what communications they've had with you, where and when you spend, and how you use their websites.

For consumers this is a double-edged sword. While this trove of data helps retailers identify what you want and therefore hopefully provide better goods and services, it can also be used to target advertising at you, and it can be shared with companies affiliated to the loyalty scheme that you may have no interest in dealing with.

Fly Buys is the biggest loyalty scheme. Last year, more than 850,000 rewards were redeemed. But it has more than two million members – so that's less than half claiming rewards. Our research shows even basic Fly Buys rewards require a hefty financial outlay.

Take the popular New World Gift cards. To earn the points (115) for a $20 voucher, you'd need to spend $2875 at the supermarket – $180 a week over four months. That's a return of less than 1 per cent. You'd need to fork out $20,250 at an earning rate of one point for every $25 to reach the 810 points required for a NutriBullet. But they ordinarily sell for $180. 

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Top tips

  • Don't spend just to earn points. If an item you need is cheaper elsewhere, buy it and pass on the points
  • Be aware of opportunities to maximise points with bonus offers and competitions
  • Watch for restrictions on earning points or using reward vouchers, such as minimum spends and excluded products
  • Keep track of expiry dates
  • Link cards with family, so all spending goes into one account and points accumulate faster
  • Remember loyalty goes two ways – you provide data, they provide reasons to keep shopping with them 
  • Remember the Privacy Act requires businesses to be open about what information they're collecting about you and how it will be used.

As for this old horse, the blinkers are firmly on until I pay for the rewards of my trip! 

For more information about loyalty schemes, as well as thousands of independent test results and research on a range of products and services, visit

* Sue Chetwin is chief executive of Consumer NZ.

 - Stuff


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