Credit card rewards disappointing: Consumer NZ

A study says the glitz and glamour some credit card reward schemes promise is often unrealistic.

Consumer NZ compared local credit card reward schemes and said most offered fairly disappointing returns.

“Credit card reward schemes are heavily promoted, luring customers with the promise of free flights and money to spend on shopping sprees,” Consumer NZ reported.

“But unless you’re a big spender, the rewards you earn can be less than impressive.”

Consumer NZ compared 29 cards to see which gave the most rewards for a spend of $25,000 over two years.

In the best case, Consumer NZ said a good card would give someone “enough rewards points to enjoy a small treat”. But in a worst-case scenario, high annual fees would leave the credit card owner with virtually nothing.

“When we last looked at these schemes in 2011, the returns . . . were disappointing. Not much has changed,” said Consumer NZ.

The study said even when a person spent $25,000 over two years, none of the cards tested would pay for a $600 return flight from Auckland to Sydney.

“When we deducted the cost of annual fees to get the net value, eight cards resulted in a negative return.” Consumer NZ said people had to “spend big” to earn decent rewards.

“Don’t spend just to earn a few extra points: the returns aren’t worth it. These schemes only make sense if you earn points as part of your regular purchases. If you’re selecting a rewards card, make sure you take the annual fees into account. High fees can quickly erode the value of the points earned.”

Rewards depended in many cases on card fees, and how and where cards were used.

“Unless you’re a big spender, the returns are likely to be limited. And if you don’t pay off your credit card balance each month, interest charges on the unpaid balance will quickly outweigh the value of any rewards.”

Consumer NZ analysed specific cards and spending scenarios.

A BNZ Visa holder would have to spend $9250 to earn enough Fly Buys points to buy a $40 toaster. For a $70 dustbuster, worth 320 points, a person would need to spend $16,000 on this card, Consumer NZ said.

The same dustbuster needed spending of $11,850 with an ASB True Rewards Visa. And on Westpac’s Hotpoints MasterCard, a customer would have to spend $9400 before claiming the dustbuster reward.

The organisation was now offering a rewards calculator on the Consumer NZ website to compare net rewards earned with different cards.

BNZ spokeswoman Grace Honney said there was “nothing worse” than being on a rewards programme where it took years to build up any decent rewards. “That’s why BNZ has recently launched BNZ Advantage, which is much more than just a new credit card or a new rewards programme.”

She said the BNZ Advantage website offered access to rewards, including travel packages, dining and shopping offers, as well as the 2500 rewards already available through Fly Buys.

An ANZ spokesman said it was up to customers to choose which card is best for them, how much they spend on the card and when they repay their credit card balance.

“ANZ card reward schemes consistently offer some of the best Airpoints rewards of any card in New Zealand.

“This is reflected in our ANZ Airpoints Visa Platinum card being the most popular Airpoints-earning credit card in New Zealand.”

Glen Martin, head of cards at ASB, said the bank had different cards for different customers.