Ways to redeem reward points wisely: The golden rules

Everyone loves being rewarded – particularly when there’s little effort involved in getting the reward in the first place! This is where loyalty programs (think: flybuys and Myer One) fit right in. But – are they really money for nothing?

While many loyalty programs don’t cost anything to join or maintain, there are still a few rules that you should follow to ensure that they are not indirectly costing you money.

It’s only a bargain if you would have bought it anyway!

Yes, we all like to occasionally tell ourselves how much we “saved” by buying that fantastic TV/couch/bike/pair of shoes while they were on special. But we all know the truth – it’s only a bargain if you needed it in the first place. The same is true for your loyalty programs – if you are buying something simply to boost your rewards points then it’s not a bargain!

It’s only worthwhile if you can’t get a better deal

If you can buy the same item at a different store for a cheaper price, then that may well outweigh the loyalty points you accrue via your program.

Ensure you won’t incur a surcharge

If your loyalty program is attached to a credit card payment method, ensure that it’s not costing you a payment surcharge. Chances are, this surcharge would outweigh the rewards points benefits!

So what are loyalty programs worth anyway? CANSTAR has crunched the numbers on a few of the more common free programs, as follows:

Loyalty Cards Average Points Earned per Dollar Spent Minimum Spend No. of Partners Average Points Spent per Dollar Redeemed Real Money value per Dollar Spent
Coles (flybuys) 1.27 21 200 0.63¢
David Jones Store Card 1 2 133 0.75¢
Myer One 1.59 29 100 1.59¢
Qantas Rewards 1.53 50+ 150 1.02¢
Virgin Rewards 3.11 39 180 1.73¢
Woolworths (Everyday Rewards) 0.88 $30 6 150 0.59¢

*Uses Qantas’ Dinner Programme. This data only takes into account points earned on dollar spends, not on flyer miles. Value rounded to nearest cent.

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