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

Weekend Argus (Saturday Edition) - - GOOD WEEKEND -

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.

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