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Are reward programs really worth it?


You’ve just purchased your groceries and, almost automatically, hand over your loyalty card to be scanned. But do you really know what it’s capturing?

The thing is, with any type of reward card or loyalty program – be it through your supermarket, chemist, department store chain or airline – your information is being collected so their marketing team can drill down on you even further. If you’re not savvy with redeeming your rewards or cashing in your end of the deal, they might not be worth having in the first place.

Let’s take a look at the different types of programs out there.

Supermarket and store loyalty cards

Retail stores use loyalty cards as a way to keep their customers coming back and spending more money, offering you something back in return.  This could be a special deal, offer or discount, or depending on the card, redeemable for frequent flyer points.

If you’re a regular shopper at this store anyway, there’s no harm in having a loyalty card if you plan on redeeming your deals. But if you’re actively changing your shopping habits to seek out these kinds of programs, it’s probably not worth your effort.

The fact is, while the company is gaining insights and data on your shopping habits, the returns are often minimal.  You often have to spend a lot to get a little back, for example, on a $1000 purchase you might only gain $5.

Credit card reward points

While a free store loyalty card might not be worth the effort, it’s not costing you anything. Credit cards, on the other hand, are.

Credit card issuers (including bank, retail and airline issued cards) use reward programs to attract consumers, offering a large range of incentives to encourage signups and spending. But before committing to one credit card over another, it’s really important to look at the annual fees and interest they charge, rather than opting for the one with the best loyalty program.  The truth is, you’ll probably end up paying more on fees than you’ll gain in points.

Another factor to consider is your ability to pay off your card each month. If you’re a consistent payer who rarely (if ever) is charged interest on your card, then opting for a credit card reward program might be worth it for you. If, however, you’re often late paying and accrue interest, it’s probably better for you to focus on paying off your debt with a no-frills, low-cost card, rather than being tempted by incentives to spend more.

But it’s not all doom and gloom. If you travel a lot and are competent credit card payer, then looking for a card that accrues points that can be redeemed for flights is a no-brainer.  Another benefit is that some credit card reward schemes offer a cashback when you reach a certain number of points, which can be used to pay off credit card debt.


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Our response to limit the spread of COVID-19

  • As COVID-19 continues to spread, we would like to take a moment to let you know what Financial Spectrum is doing to respond.

    While we haven’t been directly affected with any confirmed cases, we are taking all reasonable precautions to remain safe.Our priorities are:

    1. Keep our staff and clients safe
    2. Stay fully operational in our service delivery and continuing to manage your financial affairs
    3. Play our part in minimising the impact on our community against the spread of COVID-19

    Financial Spectrum has the technology, infrastructure and systems to continue business as usual remotely and our staff will now be working from home.

  • You should notice no change to our service, with the exception that we are encouraging our clients to meet via video call, rather than face to face, unless requested. We will be contacting all clients with meetings booked over the next two weeks with instructions for a video call.This is an evolving situation and we will continue to monitor developments. We will keep you informed of any material changes to our approach.

    These are unprecedented times and we understand that many of you will be feeling unsettled about your finances. We would like to assure you that we are open for business and are here to help you. If you don’t have a meeting booked but would like one, or if you have questions, please contact us at info@financialspectrum.com.au or on
    02 8238 0888

Brenton Tong

Managing Director

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