Does Trading Petrol Discounts For Frequent Flyer Points Make Sense?

You've been able to earn Qantas Frequent Flyer points on the Woolworths Everyday Rewards card for more than a year, but a new option lets you trade petrol discounts for additional frequent flyer points. Is that option worth pursuing?

Picture by matt_hintsa

When Woolworths launched its Qantas partnership, we noted that earning points each time you spent more than $30 was "an expensive standalone way to get a flight, but a useful way to supplement your points total". The new option doesn't really change that, and depending on your own travel habits might represent worse value than using your discount vouchers for cheaper petrol.

The system is relatively straightforward. Woolworths awards petrol discounts (worth 4 cents a litre) every time you spend $30. If you elect to swap these for Frequent Flyer points instead, you'll receive 2 points for each litre of petrol you purchase at a Caltex/Woolworths outlet. If you get one of Woolworths' occasional higher value fuel vouchers, they'll convert at a rate of half the discount (so a voucher offering 10 cents off a litre would earn 5 frequent flyer points per litre). You can change your preferences online between getting discount vouchers or frequent flyer points, but no more than once a month.

Whether this represents good value or not depends on how badly you need the fuel savings and how you intend to deploy your points. Lifehacker reader Simo, who alerted us to the scheme, made his calculation on the basis of what Qantas charges for a $50 gift certificate:

If you use the fuel discount of 4 cents, you get a discount of $4.00 on 100 litres. If you convert that to QFF points you get 200 points. But given it takes 7250 points to earn a standard $50 gift certificate at Woolworths via Frequent Flyer, your 200 points are actually worth around $1.38. $4.00 immediately or $1.38 in rewards for later - which shall I choose??

Actually, the situation is worse than that: you gain the $1.38 but lose the $4.00 fuel discount, so you end up behind by $2.62. That particular analysis makes the choice look very straightforward.

However, the best value way to utilise Qantas points is purchasing flights, and on that analysis you could arguably do better. The cheapest points value flight available through Qantas' Classic Awards scheme is 8000, which covers Sydney-Melbourne and many other shorter hops. A discounted Sydney-Melbourne flight can cost as little as $100, which would make those 200 points worth $2.50, and still leave you in the red.

On the other hand, a non-discounted and flexible one-way seat between the two cities costs $440. On that basis, the 200 points are 'worth' $11 — a much better bet, since you'd still be ahead by $7 even after allow for the lost petrol savings. (For the sake of simplicity, I haven't factored in the additional charges for airport tax here, but even if you paid $50 in cash for those, you'd still come out ahead overall.)

Bottom line? If you're saving frequent flyer points for a particular trip, and are organised enough to get a flight that would otherwise cost you big bucks, then converting your vouchers into points might make sense. For everyone else, I suspect the fuel vouchers will continue to be a more appealing option — but I'd love to hear readers' thoughts on the topic in the comments. Thanks Simo for the pointer!

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Comments

    It all depends on what your after.. In the fuel savings tracker I saved $69.18 last year. not a great deal over the course of the year, however had I been earning 2 points per litre I would have received almost 3500 frequent flyer points. I would rather my balance be 3500 points higher at the end of the year than save $1.33 each week.

    Angus, I think that's a pretty good summary. It's hard to see a lot of people choosing the points option, with the other factor being that the fuel discount represents an immediate benefit (ie. the value is gained at point of sale), whereas points are a deferred benefit.

    I think it's a rather strange move by Woolies and can't help but conjecture that maybe their deal with Qantas has forced this on them. Points for fuel purchases were promised right from the outset by Woolies/Qantas, but this offer is a bit disingenuous. It's not really rewarding the fuel purchase (certainly not in isolation) so much as a different way of rewarding the original $30 supermarket purchase. The email from Qantas didn't read this way (not the heading anyway)

    @tim

    You're right, it does depend what you're after. I hardly ever redeem my points and they just accumulate through work travel. I've just relocated so decided to use my points in the Qantas store even though I'm more than aware it's not the greatest value. My new local carrier is BA and it's painful using Qantas points on non-Qantas flights, so a new 5.1 receiver, 13inch MacBook Pro and some Sennheisers in this instance works out for me.

    Now living in the UK, the one neat thing they do here at Shell service stations is allow you to take the discount or give any discount to a charity. We give ours to the RSPCA.

    Depends how organised you are. If you lose vouchers, fill up at a Coles Express, or your local filling station doesn't accept vouchers, you are better off with the FF points.

      Vouchers are bundled on the Everyday Rewards card, so you can't lose them -- and if you use a non-voucher store, you don't get the points either.

    What about Frequent Flyers who always fly business and/or first class? Redemption values go upwards of 4c per point when redeeming for business and first class international flights.

      True -- but you need a lot more points, and the availability is often lower.

    So if you are in the top tax bracket and paying for your petrol with your after tax dollars???
    Isn't the two to one deal offer a good one if you want to travel???

    Won't I receive QFF points for spending money on petrol anyway when I use my Credit Card linked to my account? Can't I just redeem the 4c voucher, pay with Credit Card and get points?

    How does this sound? Put items through as 2 seperate transactions. THe first clock up over $30. IE: $35 etc. Pay without your rewards card. ( you still get your 4cents litre discount anyway at bottom of receipt ) Then do your normal shop with your rewards card. SO you get points which I redeem as gift cards. I think I am better off this way. ( I dont fly ) So I think I am better off?? What do you think???

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