Aussie shoppers saw credit card frequent flyer reward points slashed this month, as a result of the recent surcharge ban. If you're still hurting, wipe your tears and read this.
Velocity, Virgin Australia’s frequent flyer partner, has launched a new partnership with ShopBack that lets members convert $1 of cashback into 50 Velocity points. But is the offer as good as it looks at face value?
If you’re familiar with frequent flyer programs, you’ll know that, typically, you earn points for every dollar you spend. The Velocity and ShopBack deal is different.
ShopBack is a cashback website. It has partnerships with a range of brands – think supermarkets, insurers, fashion retailers, hotels and more – and when you make a purchase with one of these partnered brands via the ShopBack website or app, ShopBack will give you a percentage of your purchase back in cash.
For example, ShopBack currently gives members 1.5% cashback for David Jones purchases, up to 8.5% cashback on Amazon purchases, and up to 1% cashback on your Woolworths bill.
There are dozens of other offers on its website too. But how can you turn those offers into Velocity points?
How does it work?
The key thing to understand is that the 50 points are earned for every $1 of cashback, not every $1 you spend. Your purchase earns cashback first, and you can then choose to convert that cashback into Velocity Points.
Say you spend $100 at David Jones through ShopBack. At 1.5% cashback, you’d receive $1.50 in your ShopBack account. Convert that to Velocity Points and you’d get 75 points – which works out to 0.75 points for every dollar you spent.
Keep in mind, you need at least $5 in cashback before you can convert it to points. At 1.5% cashback, you’d need to spend about $334 at David Jones to reach that threshold, which would convert to 250 Velocity Points. Of course, cashback from other ShopBack retailers counts towards your balance too, so you don’t need to do all your spending in one place.
Is it worth it?
It’s worth remembering that ShopBack cashback is real money – you can withdraw it straight to your bank account. When you convert it to points instead, you’re effectively buying those points with cash. At 50 points per $1, each point costs you 2 cents. So converting $50 of cashback gets you 2,500 points, but means giving up $50 you could have spent on anything.
Whether that’s a good deal depends on how you use your points. If you redeem them for something worth more than you gave up – a well-chosen reward flight, for example – the conversion can pay off. If not, you may be better off keeping the cash.
How does it compare?
Velocity also has its own shopping portal, the Velocity Store, where members earn points directly on purchases with participating retailers. Most retailers earn 2 points per $1, and promotional rates can be higher. David Jones, for example, recently offered 4 points per $1. At that rate, a $100 David Jones purchase would earn 400 Velocity Points, compared with 75 points through ShopBack.
The difference is that Velocity Store points are earned on top of your purchase, whereas ShopBack points come at the cost of your cashback. Rates on both platforms change regularly, so it pays to check both before you shop.
Is the Velocity and ShopBack offer worth my time (and money)?
If your goal is to earn points while you shop, the Velocity Store is usually the better option, because the points come on top of your purchase rather than replacing your cashback. You’ll often get 2 points per $1 spent, and can take advantage of points-multiplier offers when they’re available.
That said, ShopBack can come out ahead on points at retailers offering high cashback rates. At 8.5% cashback, for example, a $100 Amazon purchase earns $8.50, which converts to 425 Velocity Points, more than double the standard Velocity Store rate. Just remember those points cost you the cashback you could otherwise keep.
If you’d rather keep your options open, ShopBack lets you build up your cashback and decide later how to use it. You can convert it to points once you have $5 in cashback, or withdraw it to your bank account once you have $10 in confirmed cashback. You might even find you get better value by booking your flight through one of ShopBack’s travel partners and putting cashback you’ve withdrawn towards the cost, rather than converting it to Velocity Points.
At the end of the day, points – however you earn them – are a nice bonus with purchase. But don’t let the promise of points be the sole reason you buy something.
