$1125 for a pack of glue sticks: Are loyalty schemes worth it?

AA’s decision to wind up its Smartfuel loyalty programme will be another blow for drivers already feeling the pinch at the petrol pump.

But while some will lament the loss – 97% of New Zealanders are members of at least one retail loyalty programme – experts have questioned the value of the schemes.

So is it really worth swiping that membership card? Here’s how some of the most popular schemes stack up:

Supermarket schemes

At New World, Clubcard offers members discounts, automatic entry into Clubcard competitions, and the option to earn one Flybuys point or $0.185 Air New Zealand Airpoints dollars for every $25 spent.

At those rates, you’d need to spend $1125 at New World to earn a pack of transparent glue sticks, the cheapest item available from the Flybuys store this week at 45 points. The same pack of glue sticks retails for around $8.

And if you want to get airborne on the back of your weekly shopping, be ready to play the (very) long and (very) expensive game.

Even the most bargain-basement one-way flight from Wellington to Auckland with Air New Zealand costs $69. To earn that many Airpoints dollars, you’d need to swipe your Clubcard on groceries worth $9324.

Earning rewards at Countdown/Woolworths is more straightforward, but offers similar returns.

As part of its $400 million rebrand, the company is replacing its Onecard loyalty scheme with a new Everyday Rewards programme.

The new scheme will stick with the one-for-one points system – shoppers will earn one reward point for every $1 spent at the supermarket, and for every litre of fuel and $1 spent at the BP shop, Wildbean Cafe or on BP car washes.

The scheme will also offer fuel discounts and “boosts” to help members reach 2000 points – and a $15 voucher – faster.

Flybuys

“Flybuys” is a bit of a misnomer. Although the programme was initially set up to reward members with Air New Zealand flights, those days are long over.

While you can no longer convert points to flights, you can spend them on a plenty of other goodies, from the glue sticks mentioned above to accommodation, food and drink, electronics and gift cards.

Flybuys partners offer points at different rates, from one point for every $25 spent at New World to one point for every $50 spent at Noel Leeming or Torpedo7.

The dollar value of rewards is also often also small, and shoppers may get better bang for their buck by looking for deals and comparing prices.

Air New Zealand Airpoints

A bit of a misnomer for the opposite reason, Air New Zealand’s Airpoints scheme allows members to earn and spend points all over the place, not just on flights.

Petrol stations, hardware stores and supermarkets are among the retailers offering Airpoints rewards.

Banks are also on board and those with an Airpoints credit card can maximise their earnings by “double dipping”.

Retailers including Mitre 10, New World, and Z, encourage customers to swipe their Airpoints card for rewards and pay with an Airpoints earning card to maximise their points.

As well as flights, Airpoints can be redeemed on Koru membership, items from the Airpoints store, or shared with family and friends.

Credit card schemes

Christopher Walsh, founder of financial advice platform MoneyHub, said many credit card rewards were high on fees and low on value.

“I frequently receive complaints about poor-value bank-issued cards that don’t deliver value and end up costing people $150-plus a year to spend money, albeit with an interest-free period and some form of rewards that, since 2022, have been cut back.”

Across the major banks, credit card users can earn cash and Airpoints at rates from $1 for every $95 to $200 spent.

Some cards also come with perks like airport lounge access and discounted travel insurance.

But as with the perks, fees and interest rates vary widely – while some cards have no annual fee, others cost as much as $310 per year, and interest rates on bank-issued cards can be as high as 20.95%.

With any credit card, all the benefits are lost if the balance isn’t paid in full each month, Walsh said.

“And so many New Zealanders don’t pay off the balance, which is a fast track to expensive debt that should be avoided now more than ever.

“Rewards cards only work if you can repay 100% of the balance the month it’s due. If you are in any doubt about what you can afford, it’s likely that the best credit card is no credit card.”

Other things to consider

Experts say consumers have bigger things to worry about than the value of rewards when signing up to loyalty programmes.

In its review of the grocery sector, the Commerce Commission found supermarket loyalty schemes might reduce price transparency, and make it more difficult for consumers to make informed decisions.

It also said people found the schemes confusing, even those “obsessed” with earning rewards, and often people didn’t earn enough points to receive accumulated rewards, or never redeemed them.

Consumer NZ has also warned shoppers sacrifice their personal data when using loyalty schemes and, while often held by the organisation running the programme, that information can be on sold to third parties.

As well as collecting identifying details, schemes run via an app can squirrel away additional data like the user’s location and activity.

“Even if you don’t mind your data being dished out to advertisers or sold to the highest bidder, data sharing increases the chances your information will fall into the wrong hands,” the watchdog warned.

“A major risk is data re-identification, which is where a third party crunches the numbers on ‘anonymous’ information and matches different datasets to identify you.”

This could open the door for hackers to access your private information, such as email or bank details.