New survey compares credit card reward schemes

Thursday, 5 May 2016

Earning rewards is one of the few benefits of a big credit card bill.

If you want a credit card rewards scheme that will pay off, it pays to shop around.

A new survey from research firm Canstar has compared the rewards available on a range of credit cards.

General manager of Canstar in New Zealand Jose George said a rewards scheme was the most sought-after feature for Kiwis choosing a card, rated more important than a low interest rate or a low annual fee.

Canstar found someone who spent $12,000 a year on their card would get an average reward return of $203 if they were a member of a card with flight rewards, and $108 if they were getting general rewards.

* Experts explain the fine art of getting value out of loyalty schemes**

Those who spend more get a better return. If you spend $60,000 on your card a year, you would get an average of $780 from flight rewards, or $829 from general rewards.

But there are significant differences within the bands.

'The more you spend on your credit card, the higher the average dollar value of reward you can receive. So if you spend a lot of money on credit each year you may get value from having a platinum card with a higher earn rate and no cap on the number of points that you can earn,' George said.

'Based on the products we assessed, someone spending $60,000 per year on a rewards credit card could potentially earn as much as $920 in flight rewards or as little as $170. For general rewards, they could potentially earn as much as $915 and as little as $250 on the same dollar value of spending.

'Don't assume that just because your credit card is platinum or has the word 'premium' in its name that you're getting the best value. Check what the rewards earn rate is on your card and compare that to what else in on offer in the market. Make sure that the card you choose matches your spending habits.'

Warehouse Money's Purple Visa Card and Onecard Visa Rewards, from GE via Countdown, topped the list of general rewards cards for someone who spent $12,000 a year.

The Warehouse's recently-launched card has no annual fees and its rewards do not expire. They are earned at a rate of two 'purple dollars' for every $150 spent. They can be redeemed at The Warehouse.

BNZ and Westpac offered the best rewards for people who spent more and wanted a general rewards scheme.

American Express dominated the flight rewards schemes, except for the biggest-spenders. Kiwibank, Westpac and ANZ were the better value for those spending $60,000 or more a year.

People who spend less on their cards may find it harder to get a credit card scheme that offers a good deal.

A Consumer NZ survey found New Zealanders spent an average $12,000 a year on credit cards.

At that level, a third of the cards offering travel and cashback incentives would not earn more than they spent in fees. Forty per cent of cards that offered general rewards would not hit positive territory.

Where's the value?

General rewards:

$12,000 a year: Warehouse Money Purple Visa Card, Onecard VIsa Rewards

$24,000 a year: BNZ Advantage Visa Platinum, Onecard Visa Rewards

$60,000 a year: BNZ Advantage Visa Platinum, Westpac hotpoints World MasterCard

$120,000 a year: BNZ Advantage Visa Platinum, Westpac hotpoints World MasterCard

Flight rewards:

$12,000 a year: American Express Platinum Edge Credit Card, American Express Air New Zealand Credit Card

$24,000 a year: American Express Platinum Edge Credit Card, American Express Air New Zealand Credit Card

$60,000 a year: Kiwibank Airpoints Platinum MasterCard, Westpac Airpoints Platinum MasterCard

$120,000 a year: Westpac Airpoints World MasterCard, Kiwibank Airpoints Platinum MasterCard.