Ask Lifehacker: Frequent Flyers And Loyalty Cards

Dear Lifehacker, I saw Up In The Air on the weekend and it got me thinking about all of the loyalty programmes that are out there. I currently am involved in a slew of different hotel programmes due to random work travel requirements and am also a member of both Virgin Blue and Qantas FF programmes.

Has Lifehacker ever done any sort of analysis of the different programmes and perhaps how best to capitalise on a single programme to get maximum benefit when travelling, but also when at home (e.g. Fly Buys)? Cheers, Gus

Dear Gus,

While we've run a couple of guides in recent years on how to get the best value when booking flights on Qantas' frequent flyer scheme and who the main players in the two biggest store loyalty programmes are, we've always stopped short of a comprehensive "this is the best value" guide for one simple reason: there are far too many personal variables to make it possible to be comprehensive.

Single people will have different incomes and expenditures to couples. Regular business travellers will score more points from flying, while large families will rack up value from their grocery bills. Being told to always fly Virgin Blue doesn't make much sense if Qantas is the only option at your local airport. While it's easy to state that no-one's likely to get a free flight purely from supermarket shopping without spending an absolute mozza, those points can be a useful supplement.

That said, there are two general principles that will serve you well when using any scheme:

Don't do something purely for the sake of earning points. It's easy to get addicted to running up points on a particular scheme, but it doesn't always make sense. Taking an inconvenient flight just for the points benefits, or using a supermarket that's 20 minutes drive away, is rarely going to be worth the handful of points you might accrue from any individual transaction. In the same way, while the emailed offers for extra discounts that come with schemes such as Everyday Rewards can sound appealing, the old truism remains: a bargain is only a bargain if you needed the item in the first place.

Set an overall goal. With frequent flyer schemes, having a goal in mind is a good incentive to maintain points balances. Many people I know stash up their points for a holiday, and often aim to fly business class to increase the pleasure when they do so. That's a good model (though you'll likely need to book a long way in advance when you do get the right points total, emphasising the need for flexibility). My own approach is to keep points for use on upgrades rather than extra flights, since to me that represents better value -- but again, I don't imagine that would work for everyone.

The bottom line? Only you can judge the effectiveness of a loyalty program for your own needs. With that said, if readers have any particularly clever tricks they use with particular schemes, we'd love to hear them in the comments.

Cheers, Lifehacker


Comments

    "a bargain is only a bargain if you needed the item in the first place", I need to tell my Wife this... perhaps in these words it will make more sense.

    As for Reward Schemes. The Flybuys reward program is alright especially being able to earn point when you fill up with fuel. I also got a Coles Master Card which is purly used for Fule and Shopping at FlyBuys stores. This card doubles the Flybuys reward points plus gives and additional 4cents off voucher for fuel (When earning coles voucher). Plus the instore spend of $2 gets another 2cents off per litre means that 10 cents off in total. That additional purchase is only good for a filling an empty tank.

    To me flybuys is only worth getting the Giftcards for coles branded stores (kmart, target, etc) with them you can also use the flybuys card. ;)

    I have a ANZ First Credit card for my other purchases and bills and signed up for the reward program because I calculated over previous years spends that I'd earn over $145 in giftcards per year, which is more then the $22 fee per card (2 in my case) to join the program. (I'd choose the coles giftcards for more points on flybuys.) (Note: I signed up on the ANZ First card during a promotional period being no Annual Fee Ever) This is 1 point per $1.5 spend scheme. If your paying for a reward scheme on a credit card make sure your making use of it otherwise it is costing you.

    My example is based on two people working and running two cars.

    Heya!

    Graham from Perkler.com here.

    LifeHacker have hit the main point on the head. Don't do something purely for the sake of earning points.

    I'm fond of the overall goal idea, too, but like they've said... It might not work for everyone.

    At Perkler HQ we have one real goal when taking advantage of loyalty. Don't change any of your habits, the places you shop, or the brands you buy. Instead, inquire about a loyalty program at your regular stores. If there is a program, get the card and remember to swipe/display it each time you shop. Earn the points and take advantage of the exclusive sales where it makes sense.

    If you're planning on purchasing a big ticket item it always pays to check the benefits you receive from your credit card program, or even your motor club like NRMA or RACV. Some credit cards have instant savings at big retailers, others will offer bonus points. So if the price is right, then take advantage of the bonus.

    A few months back we did some research to find out how much a family of four (two adults, two children) could save over the course of a year both with the use of credit cards and without. We found that your average family, based on ABS figures, can save over $4,000 a year simply by remembering to swipe/display the card at the point of sale, or planning ahead and making a pre-purchase online for items such as movie tickets.

    That being said, this family was a member of over 25 different retail loyalty programs, and had three credit cards (Two with no annual fee and one connected to their chosen frequent flyer account). This research backs up this article, there is no one card to rule them all. If there was one magical card then the other programs wouldn't exist. Each program has different pros and cons for each individual and we here at Perkler HQ can only recommend that before purchasing, do some research, find what you're entitled to, and remember to swipe your card.

    Cheers,
    Graham

    I sat down and worked out how many points I get for each dollar I spend and then work out how many points I need for the cheapest giftcard.

    MyerOne turns out to be 2%.
    Everyday Rewards to Qantas is 0.69% (but need the minimum $30 spend each time, which would make it much worse)
    Westpac Mastercard 0.54%
    Westpac American Express 1.08% (but some places charge you more for AMEX - JB's 1.9% more to use AMEX)
    Flybuys (at Coles) is only 0.32% and
    Flybuys (at Coles Express) is a paltry 0.16%, which is 8c for every $50.00 you spend.

    So the best I can do is shop with my AMEX card at Myers for 3.08% (1.08% + 2.0%). Not worth going out of your way for just over 3%.

    It's only worth it if you are already gonna shop there in the first place.

      With a Source MasterCard & Flybuys (at Coles) is only 0.64% and
      Source MasterCard & Flybuys (at Coles Express) is a paltry 0.32%, which is 16c for every $50.00 you spend.
      Plus Save 8c a liter on fuel. (4c from Coles, 4c from Source MasterCard & 2c if you buy a $2 item at Coles Express = 10c / liter discount)

    The only loyalty card program I use is the priceline club card. I spend about $50 a month on cosmetics / tolietries etc and end up with btween $40 - 80 worth of vouchers each year, which is a significant saving.

    Still can't fathom the value of loyalty CC's when it can cost $200-250 a year just to have one.

    Thanks for the article and also for the valuable comments! I've never really altered my flights to get points, but have certainly been selective in the hotels I use.

    I aim to use points for flight upgrades so I think i'll stick with trying to stay at hotels that also earn Frequent Flyer points, but only if there is no comparable option for quality/comfort.

    simo - those are some shocking figures.

    Have a look at the Cards that come with both an Amex and a Visa/Mastercard linked together, one fee.

    I have one that gives me 3 points per dollar on the amex, and 1 point per dollar on the mastercard - linked. If they dont take amex or charge a surcharge for it i used mastercard.

    Annual fee is 295 a year i think, but i worked out i can get about 1000$ of vouchers (or close to it in cash back) just with my normal spending.

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