Credit rewards come at a price
- 28/02/08
have CONSUMERS are getting more bang
for their buck with credit
cards rewards programs compared to a year ago,
but they're still not worth it for casual spenders
a new report says.
Financial research firm Cannex analysed more than
100 credit card rewards programs and found, on average,
splashing out $13,500 on plastic will return $100
worth of free stuff.
In the two main categories of rewards - shopping
vouchers and Frequent Flyer points - Cannex says the
value to consumers has increased by 20 per cent and
7 per cent respectively in the past year.
"A low usage consumer spending $12,000 annually
on a card can now expect to receive an average reward
return (RR) of $89, which equates to around 74 per
$100 spend,'' the firm says. ``A year ago, the average
RR was 61 per $100 spent.''
When it comes to Frequent Flyer rewards, Cannex says
consumers are also getting more mileage, particularly
with domestic flights.
"Currently, a Sydney-Melbourne flight requires
an average $18,630 spend, down from an average of
$20,000 in January 2007.'' But some cards reward you
after spending only $8000 while others want as much
as $36,000.
It's also not worth signing up for a rewards
program unless you intend to use your card a lot
- and can pay it back in full each month.
Cannex found two-thirds of rewards programs offered
no positive return for consumers who spent under $12,000
a year.
"When choosing a credit
cards rewards program, it's important to remember
that, on average, you are likely to be paying for
the privilege through higher interest rates and annual
fees.'
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