Are reward programmes worth it?

2012-05-05 09:31

Take a step back and look at your cards. Some may cost more than they are worth

What’s not to love about cards that reward you for spending?

Every large retailer and even small mom-and-pop stores now have reward cards to buy your loyalty, which is why our wallets are bulging with potential rewards.

Maybe it is time to take a step back and question whether those free loyalty cards are worth the clutter and if those programmes we pay for on our credit cards aren’t actually costing us more than we are saving.

It is time to start clearing out and only keep those cards that deliver real value.

Free loyalty
‘Free’ loyalty programmes may make sense, but are the rewards worth it?

Certainly, I have benefited from my Exclusive Books Fanatics card and the amount I shop at Dis-Chem also makes it valuable.

But when I analysed my local nursery’s loyalty programme, I realised that after spending R1 000, they gave me a half-dead chrysanthemum pot plant – ditto for the health shop card.

However, I have had a few freebies from my Kauai card and the kids like collecting the stickers.

But “free” still comes with a cost. When you sign up for a loyalty programme, you hand your personal data to the retailer – valuable for their marketing department, but it may result in your inbox being filled with “special offers”.

Set up a separate Gmail account so that your regular email box is not flooded with “special offers”.

Paying for rewards
When it comes to loyalty programmes that require an annual fee, you need to be extra vigilant.

Most credit card-based reward programmes come with an annual fee over and above your regular credit card fee.

If you are not a regular user of the rewards, it may well be costing you more than you make from the rewards.

It may also land you up in a lot of debt.

If you are not paying your credit card off at the end of each month, you will be hit with hefty interest bills, which pretty much mitigates any rewards you may have received.

So if you have signed up for a reward programme, make sure you fully understand it and that you use it.

If your primary use for a rewards programme is frequent-flyer miles, then select just one programme and stick with that so that you accumulate points faster.

The lowdown on some of the offers on the market

Fast rewards: Amex cards
American Express rates itself as the best conversion of rewards on the market and they never expire. You can also pay your card fees with your rewards, so in effect you can bank for free.

The downside is that despite its claims, it is not readily accepted at smaller merchants. A way around this is to opt for a Nedbank credit card that issues you both with a Mastercard and American Express card.

You earn double the points if you use your Amex card, but you have the Mastercard as a backup.

» Annual fee: From R165 to R595; plus R169 for the Reward programme

» Earn rate: One Reward for R5 spent; three Reward points per Voyager Mile

» R15 = one Voyager Mile.

Most popular: eBucks by FNB
Many FNB customers swear by their eBucks account, which they earn through swiping their cheque or credit card.

The thing with eBucks is you can earn eBucks on your cheque account so you don’t have to go into debt to earn.

You also earn points by filling up with fuel; shopping with their partners, like; taking out a 24-month contract with Nashua Mobile; or subscribing to a Tracker vehicle-tracking service.

You can use your eBucks to shop in-store with their internet partners, buy fuel, plane tickets or airtime.

» Annual fee: R175 to link your credit card to eBucks
» Earn rate: Ten eBucks for every R100 spent on your credit card (spending caps apply and a Platinum card holder earns more)

» Eight eBucks for every R100 spent on a debit card – equates to 0.8%; 10 eBucks gives you R1 of spend – equates to 1%

» Double your earn by also swiping your eBucks card at partner stores

The traveller: Kulula card

Kulula card is the best way to clock up air miles because Kulula Moola converts to cash, which you can use whenever you book a flight – no waiting for special “reward” seats to become available.

You also don’t have to save until you have the full fare – you can cash in your Moola any time.

If you spend R5 000 a month, you earn R150 a month – but remember the first two months will go just to paying your annual fee.

» Annual fee: R300

» Earn rate: Three percent on first R5 000 per month; 2% on R5 001 – R10 000; 1% on R10 001 – R20 000

Smart Shopper: Pick n Pay
Pick n Pay’s Smart Shopper has no fees and you earn points every time you shop at the store. Shoppers can earn double or triple bonus points on certain special offers and “shopping sprees”.

There are no different levels of customer based on spend, so all Smart Shoppers earn the same amount of points.

Once you have switched points on to your Smart Shopper card, they are converted to a rand value you use at the till.

However, if you don’t use that card for three years, the card will be deactivated and the cash balance on the card lost.

Smart Shoppers also qualify for special vouchers available at the in-store kiosk from time to time. To receive your vouchers, you need to swipe your card, then touch the “Get My Offers” button and your vouchers will be displayed.

» Earn rate: One “Smart point” for every rand you spend

» One thousand points equals R10 to spend on your next purchase, which equates to 1%
Nedbank Affinity cards

A percentage of total purchases with the Nedbank Affinity credit card is donated monthly to charity at no cost to you.

You can choose a card that supports the environment, children, art or sports.

You can sign up for the Greenbacks reward programme for an extra R169 a year. You can use your rewards for a variety of benefits, but you can also donate your rewards to charity.

» Annual fee: R171 – R500

Health freak: Discovery card
This card really works for you if you are a Discovery Vitality member. You can receive between 15% and 35% discounts on BA and Emirates flights (that does not include your Discovery Miles), and Vitality members save between 10% and 20% at partner stores and between 5% and 10% atPick n Pay.

» Annual fee: R305 – R540

» Earn rate: One Discovery Mile for every R12 spent; 1.5 Discovery Miles = 1 SAA Voyager Mile.

» R18 = 1 Voyager Mile. (Note that 1 Discovery Mile = 1 BA Mile, so the rate for BA flights is only R12 per 1 BA Mile)

Woolworths Black Card
The annual fee is high, so this card only makes sense if you opt for all the benefits. You get a free Taste magazine and two free coffees a month.

But you really need to use their online shopping to make it work for you as you are refunded the R50 delivery fee. Otherwise, you need to spend R2 000 a month at Woolworths to get back your monthly fee.

Another option is the Woolworths Gold Card. It is half the annual fee, but the rewards are 2% back and there are no magazines, coffees or free online shopping delivery. But you do qualify for in-store special discounts.

» Annual fee: R595

» Earn rate: Three percent of your Woolies spend back as Woolworths vouchers; 1% of spend at other shops as Woolworths vouchers

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.