London’s calling ... But will it still be on your bucket list in 2062? Picture: Britain Visit Source: Supplied
REWARDS card users could be on a road to nowhere, according to the latest analysis of credit card loyalty programs by comparison website mozo.com.au.
In a dramatic illustration of rewards cards’ limited mileage, it would take Hilton HHonors Macquarie Platinum Card customers a whopping 47 years to earn enough points for a return flight from Sydney to London.
This is based on an average yearly spend of $18,000 to reach the $853,333 required to unlock the reward.
It gives new meaning to the bucket list overseas trip, with plenty of consumers likely to count themselves lucky to be alive in 2062.
Customers would be better off sticking closer to home and opting for a trip to Melbourne, which could be earned in just under three years with a required $53,333 spend. We hope that’s not for an economy seat.
The average Heritage Bank Classic Card customer would take three-and-a-half years to earn a $100 gift card, with the required spend set at $64,000 and points accrued at the measly rate of 0.001 per dollar.
It’s not just hotel loyalty programs and building societies that offer limited rewards. Expect to rack up a $40,000 grocery bill on your Coles No Annual Fee MasterCard before getting your hands on a $100 cash reward — a two-year slog for the average shopper.
Consumer group Choice has seized on the data to savage credit card companies, with campaigns manager Erin Turner telling news.com.au: “It’s a perfect illustration of why reward programs aren't worth it. Credit card companies are trying to bamboozle people.
“Unless you’re spending big and paying off the card every month, there is no benefit. You’ve got to take into account what you may be paying in interest.”
She said rewards cards often attracted a higher rate of interest on purchases and had higher annual fees than ordinary credit cards.
“We don’t recommend using credit cards at all. There are much better methods of payment out there, like personal loans for big purchases or home loan redraw facilities.”
And the best option, she said, was to save up for that coveted holiday.
“You can get a return flight to Melbourne for a couple of hundred dollars; you don’t need to spend $50,000.”
Mozo director Kirsty Lamont said that loyalty card programs varied greatly, and there were still
“some great value cards out there which do reward you for your normal spending behaviour”.
“The vast difference in rewards value is reason to shop around,” Ms Lamont said, encouraging consumers to compare online.
COUNTING THE COST
* The average annual fee on a rewards credit card is $165, versus an average $115 for non-reward cards.
* The average interest rate for purchases on a rewards credit card is 19.73 per cent, against an average 17.61 per cent on a non-reward card.
* The average value customers get back from a rewards credit card is just $88 per year.
* Cash back rewards offer the lowest value, while flights from Sydney to Melbourne are the best value rewards.
* Mozo recommends choosing a card aligned to an airline points scheme to get the best bang for your buck.
* If you have companion cards, use the one that returns the most points — but watch out for surcharges.
* Check the value of the points earned, as these can vary greatly between providers.
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