Loyalty programmes can pay off for you
The results of a recent survey have been used to assess the value the banks’ rewards schemes have for their members. Neesa Moodley-Isaacs reports
Most banks offer you some sort of rewards programme. Many people sign up for a programme and either forget about it or do not take full advantage of its benefits, because they do not fully understand how it works. How do you know what value you are actually deriving from your rewards programme?
Independent consultant Colin Habberton recently assessed the results of a survey, conducted by eBucks, of some of the more popular loyalty programmes offered by financial services companies.
The programmes that were analysed included Absa Rewards, American Express (Amex) Membership Rewards, Diners Club, eBucks from First National Bank (FNB), Investec Dividends and Nedbank’s Greenbacks.
The research was conducted between March and June this year. Some of the things the survey looked at were the transparency of the programmes, their structure, their discount and rewards partners, and what they cost.
The research broke down each reward system into a rand amount (for example, one Greenback equals 2.5 cents), but with many of the programmes this was an approximate amount, as the programmes are not always transparent about what their points are worth.
The study then evaluated how much money you would have to spend to cover the membership or linkage fees, and the amount you would have to spend to earn points worth R100. (You may be charged a linkage fee to associate your credit card with a loyalty programme so that you can ear n points when you pay for purchases with your credit card.)
“Loyalty programmes have the power to offer you value in tight economic times. Each loyalty scheme included in the study has such value, some more than others,” Habberton says.
eBucks emerged as the rewards programme with the lowest spending in rands – R590 – required to receive rewards currency worth R100. The next best programme was Absa Rewards, at R1 750. Nedbank’s Greenbacks required the most spend at R16 500.
The eBucks programme is available to anyone, although it has maximum benefit for FNB clients. You can use eBucks to make online purchases, and you can top up your eBucks payments with rands.
eBucks members can use their eBucks to pay for fuel at participating Engen garages. As this benefit is still quite new, you should first check whether a garage accepts eBucks. If it does, you can use your eBucks card and PIN to pay for the transaction. However, you will have to carry part of the cost of the transaction fee, which will cost you R10 or 100 eBucks.
eBucks never expire, and you can transfer your eBucks to another eBucks member at no cost.
Qualifying members receive discounts from retail partners – for example, up to 50 percent off Ster-Kinekor movie tickets, up to 20 percent off kulula.com flights and up to 15 percent off Woolworths gift cards.
Absa Rewards, which is exclusive to Absa clients, is a relaunch of an old Absa loyalty programme. “The membership fee is higher than previously and it makes this one of the more expensive rewards programmes offered by the big four banks in terms of linkage or membership fees,” Habberton says.
He says the inability to earn Rewards for normal expenditure on your bank card seems inconsistent with the fact that this product is offered by a bank.
“The actual ability to earn Rewards could be considered limited, because the earn partners in the programme may not cover all retailers that the general public regularly uses,” he says.
Habberton says the programme’s use of the words “cash back” could be misleading, as your Rewards go into a non-interest-bearing Rewards account, and this money can be paid out only once you have accrued Rewards worth R50.
The Diners Club programme will suit you if you want to maximise your frequent-flyer miles on South African Airways and British Airways.
However, Habberton says that both airlines’ frequent-flyer programmes seem to be beset by complaints over the unavailability of seats when members want to redeem their miles. Another drawback is that not all retailers accept the Diners Club card. To participate in the Investec Dividends programme, you have to be an Investec
Private Bank customer, which means you must be either a university graduate or a “high earner”.
Unlike other rewards programmes, Investec Dividends has no membership or linkage fees.
The Amex Membership Rewards programme has a simple structure, but you can redeem your Rewards only after you have accrued 3 000 points, which means you will have to spend R15 000. Another drawback is that Amex credit cards are not accepted at all stores.
A positive feature is that your points do not expire, so even if you are a slow earner, you can eventually accumulate sufficient points. Habberton says Nedbank’s Green
backs programme is very similar to the one offered by Amex but lacks variety in terms of earning options when compared with other loyalty programmes.