Some people claim frequent flyer points are the best thing since sliced bread, others will struggle to get a $20 voucher for all their spending. We thought it would be good to answer this question and bust a few myths - So, are frequent flyer points ever worth the effort and under what circumstances do they work or not?
Shed some light on this burning question and you’ll be helping consumers plus you’ll also enter our competition.
We’ve investigated this before, and it depends. For just points for transactions on your card - barely to not really worth it if you are paying a credit card fee on the transaction for typical rates of points per dollar spent, and definitely not worth it if it means you are paying interest on your credit card transaction, which you wouldn’t have paid if you used a debit card or cash.
Sometimes the credit card companies have promotions where they pay 1 (or more) point per dollar spent, and then the points are worthwhile as long as the transaction fee is at the low end of the range charged.
However, all the above depends on how much you spend annually on the credit card- if you don’t spend much, then the annual fee is going to wipe out any benefit- you have to spend a lot - tens of thousands per year to cover the fees.
Some supermarkets (and maybe other stores) also give you points for money spent, and that can make it more worthwhile, but the cost is that you are giving them details of all your buying habits… which we were not particularly happy with, and so cancelled our rewards cards quite a while ago, so don’t get those points.
No. Especially if you try to put any value on your privacy, such as it is (nonexistent anyway, but …)
If one chases frequent flyer points when making purchases/bookings, that being makes purchase decisions to get frequent flyer pounts, then it is a definite no.
In such case, if one shops around it is highly likely that one will get the same purchase/service cheaper. As a result, one will not recoup more value in frequent flyer point than from savings from shopping around.
However it can also be a yes. If one shops around and the cheapest retailer/service provider offers frequent flyer points, then the frequent flyer points are a bonus to the purchase being made. It is a bonus is one is able to join the frequent flyer program free, which even some of the ones which charge for membership often do from time to time. Then it could be argues that frequent flyer points haven’t really cost one anything.
I agree with phbriggs2000. It depends mainly on what it costs to join the program, what value you put on your privacy and whether you pay more for goods or services offering frequent flyer (or other loyalty) points.
I have a credit card linked to an airline frequent flyer program which cost me nothing to join. I do most of my spending on this card almost always pay the total outstanding when due. I therefore accumulate points at no effort at all (I don’t even need to go hunting through my wallet for the loyalty card). I have a daughter living in England and this year my annual trip to see her cost only ~$600 return because I used my points to pay most of the fare. Well worth it for me.
I don’t earn many points from flying, but have earned plenty using credit cards. Since 1997 I’ve had around 3 return trips to Hong Kong, 4 return trips to Bali and a return business class trip to Melbourne. I’ve currently got enough points to pay for 3 return economy tickets to Europe.
I have various cards which either don’t have an annual fee, or the annual fee is offset by a travel credit each year. So for me frequent flyer points are definitely worth it.
I agree, it really only works if the annual card fee is minimal or no charge.
I use flybuy points on a Coles MasterCard (which are not frequent flyer points but can be converted to frequent flyer points eg Velocity).
I previously had an NAB Mastercard for many years which accrued Flybuys points on each purchase and had an annual fee of only $20.
Then NAB jacked up the annual fee and removed the link to Flybuys, so I cancelled it as the fee easily exceeded what I would get back in Flybuys redemptions.
I currently use a Coles Mastercard which has no annual fees and accrues 2 points for every dollar spent at approved businesses.
For a while, Flybuys points could be traded in for cash vouchers or a cash bank deposit but now I use them in lots of 2000 points to get $10 off a shop at Coles. I shop mainly at Coles. and Foodland but occasionally at IGA and Woolworths, yet looking at my account, have redeemed $130 at Coles in the last 6 months…so not a lot of money, but I guess $200 - $300 a year is something for nothing.
I pay the card off on time each month so don’t pay any interest and apart from recently in March 2018 when Coles Financial completely changed their website and were unable to get the electronic statements on it working for over 2 weeks, I would recommend the Card with Flybuys rewards to anyone if they can get it Fee free. Mind you, I haven’t lost or damaged their card yet but it might be a hassle if you have an issue with their card or the points and have to rely only on their somewhat flaky phone support.
However, I often see specials (eg on service station counters) where chocolate bars and other items are offered with a bonus 20-50 flybuys points. You always have to remind yourself that you actually need at least 200 points to save a dollar. You are invariably going to lose if you make purchases with thoughts of getting extra points.
OT, but that’s a problem that is getting out of control, so much sugary crap crowding some counters, stacked up above, or hanging out on racks in front that it’s tricky to do your transaction at the counter.
I have found frequent flyer points and flybuys a great bonus but only by following one important rule - I never buy something or use a particular shop just because it offers points. In other words, I use my normal consumer common sense in deciding what/where to buy and then produce my card if they happen to also provide points. Also, my credit card provides FF points and I pay off my credit card in full each month. As a result, over the years I have acquired a cafe grill, a capsule coffee maker and milk frother and two fitness trackers (the first was a Tom Tom years ago and when it finally died recently I replaced it with a Fit Bit). All with FF or Flybuy points. I have also taken many domestic flights (at least one a year) using points. So it works for me but only as long as I stay disciplined and don’t let it influence my purchasing decisions. I do get tempted but make a point of giving myself a tick when I resist the temptation and miss out on points but get a better deal elsewhere.
Some interesting cases here - thanks for sharing your frequent flyer stories. Please keep adding in your good or bad experiences, so we can add some further depth to the topic.
CHOICE has also looked into this question and has these frequent flyer tips, for those who would like further reading on the subject.
An interesting and informative discussion. My contribution that I don’t think anyone has mentioned, is the need to take account of surcharges for paying with a card. The recent reductions in the points earned per $ spent with many cards means it may no longer be cost effective to pay the surcharge.
For example, if your are now only getting 0.5 of a point per $ spent, and a point is worth on average around 0.7% it is generally not worth paying a surcharge of more than 0.35% to be able to pay with that card. Of, course the situation changes if a point is worth more then 0.7% or if only a small number of points are needed now to allow a planned points redemption to go ahead.
I refuse to pay a surchage when using my cards. I value my points at 1% and earn at least 1 point per dollar, in some cases up to 3 points per dollar on the AMEX Platinum Edge. I tend to convert my Flybuys points into Velocity Rewards during the promotional periods where they offer an additional 15% bonus, so I’m getting a little over 1VFF per dollar spent. I’ve found best use of the VFF is for overseas flights during school holiday periods where the points cost is the same, but the cost to buy them with dollars is significantly higher than other times of the year.
Good tips re when to convert Flybuys points to VFF points and getting a high return per point spent by booking overseas flights during school holidays.
Re the latter I expect that you will have to make bookings a longtime before the flight date.
Yes, when we booked our April 2017 trip to Bali I was checking everyday 11 months out and booked on the day that they were released. We still ended up having to fly Sydney --> Brisbane --> Bali --> Brisbane --> Sydney as we couldn’t get FF seats on the direct flight. But we only paid $500 in taxes, the tickets with Virgin were $1000 pp had we paid for them. So that would have cost us $4000, maybe a little less because the children’s ticket are slightly cheaper.
‘We’ are not alone is noticing questionable behaviour to get revenue.
If you have decided to use rewards credit cards, here are the best frequent flyer cards for a range of spending profiles.
I note that Flybuys has now partnered with Etihad & Velocity, so Flybuys can be converted to those reward programs. As Flybuys are linked to the Coles CC is this something worth looking at even thought not strictly a straight out CC Reward? I know the Coles card was in the top 20 but no reference to those Airline linkages.
Interesting, 1 point per $1 for Etihad but looks like the program is paused at the moment. Also 2000 flybuys points = 870 Velocity Frequent Flyer Points.
I think it would be interesting to compare the shopper loyalty programs directly with the credit card rewards side by side. We’ve had a look at programs like Flybuys in the past and aside from the data collection/behaviour issues we found they deliver less than a dollar of savings for every $100 spent.
I only convert Flybuys to Velocity when the have a 15% or 20% extra points offer like they did in May, which ends up giving just over 1 VFF for $1 spend.
As a VERY long term user of the Coles/Flybuys credit card…I think I got one when they first came out…I’ve been diligently using my credit card for everything and then paying it off in full each month.
When some institutions started adding on a credit card fee, I carefully did my maths, working out that for every 2000 points earned, that would get me a $10 shopping voucher, which for me equated to spending $1000. So as long as the fee was less than 1%…I was ahead…or so I thought.
Having just paid a couple of ATO bills, I’ve discovered that no points are given for Govt type transactions…" Government related transactions include transactions with government or semigovernment entities, or relating to services provided by or in connection with government (for example but not limited to transactions made at Australia Post, payments to the Australian Taxation Office, council rates, motor registries, tolls, parking stations and meters, fares on public transport, fines and court related costs)."
And I only just realised this translates across to paying Rates, water rates, car rego…all of which I’ve been doing…and annoyingly…these are the ones who generally charge that extra fee.
I’ve been doing this for years, and the way they transfer the points across from the Credit Card to Flybuys, it is very difficult to tell if you haven’t received some.
I’d imagine I’m not the only one…