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Reading the article below, there seems to be a heavy price attached to getting air miles on your credit card loyalty program.
So, when is a loyalty program worth it? How does one get best value out of the various loyalty programs?
You have to spend, on average, a massive R196 460 over six years to qualify for a "free" return flight between Johannesburg and Cape Town or vice versa, according to research by Virgin Money.
And over the course of those five years, the average cardholder is hit with R1 441 in annual card fees, the study found.
However, if you booked five months before your departure, you could purchase a return flight between Johannesburg and Cape Town for R898 with 1Time, R498 with Mango or R496 with Kulula.
Air Mile programmes award you a certain number of miles or points in return for your credit card spending. You are required to spend a specific amount of money to accumulate each mile or point. You qualify for your "free" flight once you have accumulated the required number of miles or points.
The spending per mile varies between the different credit cards but usually ranges between R5 and R12.50 per mile. The number of miles or points needed for a return flight between Johannesburg and Cape Town varies from 18 000 miles in the case of the South African Airways (SAA) Voyager card to 30 000 miles with Standard Bank to fly on British Airways.
Many people fail to take into account that the "free" flights offered by rewards programmes exclude airport taxes, which can cost between R300 and R750, according to the study by Virgin Money.
The low-cost flights with Kulula, Mango and 1Time quoted above all include airport taxes.
Furthermore, when you do eventually qualify for a "free" ticket, you are not assured of a seat on the flight of your choice. This is because you have to navigate your way through the terms and conditions to fully understand the exclusions and "blackout" periods.
In simple English, you probably will not be allowed to use your free flight over long weekends, public or school holidays, Christmas, Easter or any other peak periods.
Virgin Money's calculations were based on industry figures showing that the average South African credit cardholder spends about R3 000 a month on his or her credit card, Gavin Muller, the group's credit product director, says.
According to the study, the Nedbank Greenbacks miles programme, with SAA Voyager as a partner, tops the list in terms of cardholder spending required to earn Air Miles.
The study found that you would need 27 100 points to qualify for a return flight from Johannesburg to Cape Town on SAA through the Nedbank programme. At one mile earned per R12.50 spent, this means you have to spend a hefty R338 750, which at average spending of about R3 000 a month means it will be about 9.4 years before you qualify for the "free" flight.
In terms of card fees, the worst programme is American Express. You will pay R2 440 in card fees over the 7.5 years it will take you to accumulate enough points to earn a "free" flight.
However, Vanessa Singh, the head of card marketing at Nedbank, says the Nedbank Greenbacks and the American Express rewards programmes are not specifically Air Miles programmes. (Nedbank operates the American Express card franchise in South Africa.)
"These programmes allow clients to earn and spend rewards on a variety of goods and services, and although they are used to top up flight purchases, the Nedbank Greenbacks programme is not targeted at miles 'junkies'," she says.
The Nedbank Greenbacks programme is aimed at clients who prefer everyday rewards, such as the payment of their bank and card fees, charitable donations or investing in unit trusts, Singh says.
She points out that an indepen-dent study by research company Razor's Edge Business Intelligence last year rated the SAA Voyager premium credit card, which uses Nedbank as a banking partner, as offering the best value in the high- income category.
However, the study by Razor's Edge Business Intelligence assessed the credit cards on value offered in terms of rebates and loyalty points, and cards were evaluated according to the value they offered in different income categories.
The Virgin Money study also shows that the Absa Rewards programme requires 40 300 points to qualify for a Johannesburg-Cape Town return flight at a spending per point rate of R5. You would have to spend R201 500 over 67 months or 5.6 years, incurring R518 in annual costs. However, Chris Sweeney, the managing director of Absa Card, disputed these figures. "You only need 25 000 points to qualify for a Johannesburg-Cape Town return flight, and at R5 a point, that equates to expenditure of R125 000," he says.
One of the things you need to watch out for in the fine print is that sometimes the Air Miles you have accumulated so carefully must be used within a certain period of time or else they expire. This means the onus is on you to keep track of how many air miles or points you have accumulated and to make sure you claim them timeously.
BEFORE YOU JOIN A PROGRAMME
Ask yourself the following questions before you join a loyalty programme:
from Personal Finance here
And over the course of those five years, the average cardholder is hit with R1 441 in annual card fees, the study found.
However, if you booked five months before your departure, you could purchase a return flight between Johannesburg and Cape Town for R898 with 1Time, R498 with Mango or R496 with Kulula.
Air Mile programmes award you a certain number of miles or points in return for your credit card spending. You are required to spend a specific amount of money to accumulate each mile or point. You qualify for your "free" flight once you have accumulated the required number of miles or points.
The spending per mile varies between the different credit cards but usually ranges between R5 and R12.50 per mile. The number of miles or points needed for a return flight between Johannesburg and Cape Town varies from 18 000 miles in the case of the South African Airways (SAA) Voyager card to 30 000 miles with Standard Bank to fly on British Airways.
Many people fail to take into account that the "free" flights offered by rewards programmes exclude airport taxes, which can cost between R300 and R750, according to the study by Virgin Money.
The low-cost flights with Kulula, Mango and 1Time quoted above all include airport taxes.
Furthermore, when you do eventually qualify for a "free" ticket, you are not assured of a seat on the flight of your choice. This is because you have to navigate your way through the terms and conditions to fully understand the exclusions and "blackout" periods.
In simple English, you probably will not be allowed to use your free flight over long weekends, public or school holidays, Christmas, Easter or any other peak periods.
Virgin Money's calculations were based on industry figures showing that the average South African credit cardholder spends about R3 000 a month on his or her credit card, Gavin Muller, the group's credit product director, says.
According to the study, the Nedbank Greenbacks miles programme, with SAA Voyager as a partner, tops the list in terms of cardholder spending required to earn Air Miles.
The study found that you would need 27 100 points to qualify for a return flight from Johannesburg to Cape Town on SAA through the Nedbank programme. At one mile earned per R12.50 spent, this means you have to spend a hefty R338 750, which at average spending of about R3 000 a month means it will be about 9.4 years before you qualify for the "free" flight.
In terms of card fees, the worst programme is American Express. You will pay R2 440 in card fees over the 7.5 years it will take you to accumulate enough points to earn a "free" flight.
However, Vanessa Singh, the head of card marketing at Nedbank, says the Nedbank Greenbacks and the American Express rewards programmes are not specifically Air Miles programmes. (Nedbank operates the American Express card franchise in South Africa.)
"These programmes allow clients to earn and spend rewards on a variety of goods and services, and although they are used to top up flight purchases, the Nedbank Greenbacks programme is not targeted at miles 'junkies'," she says.
The Nedbank Greenbacks programme is aimed at clients who prefer everyday rewards, such as the payment of their bank and card fees, charitable donations or investing in unit trusts, Singh says.
She points out that an indepen-dent study by research company Razor's Edge Business Intelligence last year rated the SAA Voyager premium credit card, which uses Nedbank as a banking partner, as offering the best value in the high- income category.
However, the study by Razor's Edge Business Intelligence assessed the credit cards on value offered in terms of rebates and loyalty points, and cards were evaluated according to the value they offered in different income categories.
The Virgin Money study also shows that the Absa Rewards programme requires 40 300 points to qualify for a Johannesburg-Cape Town return flight at a spending per point rate of R5. You would have to spend R201 500 over 67 months or 5.6 years, incurring R518 in annual costs. However, Chris Sweeney, the managing director of Absa Card, disputed these figures. "You only need 25 000 points to qualify for a Johannesburg-Cape Town return flight, and at R5 a point, that equates to expenditure of R125 000," he says.
One of the things you need to watch out for in the fine print is that sometimes the Air Miles you have accumulated so carefully must be used within a certain period of time or else they expire. This means the onus is on you to keep track of how many air miles or points you have accumulated and to make sure you claim them timeously.
BEFORE YOU JOIN A PROGRAMME
Ask yourself the following questions before you join a loyalty programme:
- Do you have to pay an annual fee or a linkage fee to belong to the programme? A linkage fee is paid to ensure that when you spend money, the points earned are counted by the rewards programme.
- Do you have to pay an annual fee for the credit card to which the loyalty programme is linked?
- Does the status of your card influence the size of the reward or the time it will take you to accumulate the Air Miles?
- Are the rewards limited to availability or capacity restrictions? For example, can you get on to the flight of your choice?
- Are there any thresholds or amounts you have to spend before you start earning points or miles?
- Do your points expire after a certain time period?
from Personal Finance here
- Nedbank deserves every cancelled account they get. It is time they realised that their marketing bullshit does not live up to just good honest reliable banking service without the need to tick a box that says we want to send you crap about all our other services, insurance and useless banking bullshit and offers.
They give you this minuscule return, that the merchants pay for anyway and then make you beg for it on top of that.
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