Loyalty Cards

Reporter: Jonathan Creek

When it comes to rewards programs, Australian shoppers are addicted to the points. 11 million Australians are signed up to one or more loyalty programs via credit cards, frequent flyers, supermarkets, banks, clothing stores even coffee shops. They all promise rich rewards, and encourage us to spend up big but is being so loyal really worth it in the long run?

When it comes to Loyalty programs Mark and Kerry Hanton are long term investors. The pair have directed all their spending, more than $600,000, through their Citibank credit cards, including a sizeable mortgage and children's school fees. The plan was to earn enough points for a holiday to New York. Basically the bottom line is after 15 years loyal service with Citibank our rewards points now equal a monetary value of $3200." That's hardly going to cover the return airfares. "We believe we haven't been rewarded adequately for our loyalty…. for $600,000 to make just over three no, disappointed."

64 year old Penny is another loyal shopper who feels let down."If you started on the Fly Buys program today and spent $160 on shopping every week it would take you 19 years, or more than $150,000, just to earn $500 in rewards. As competition and consumer expert Frank Zumbo explains rewards points programs are more about market research than rewarding loyalty. "These loyalty programs collect a lot of information about customers and the companies will use that but what the customer doesn't know is a lot of that information is sold to third parties" adds Frank.

Michele Levine from research house Roy Morgan agrees, the real value in rewards is in favour of the companies that offer them.They know what the customers buy, where they shop, how much they spend how frequently they come back this is incredibly valuable information" says Michele. But with competition hotting up, phone carrier Vodafone is determined to break the mould by offering a 10% cash value return on money spent on prepaid mobiles.

Jana Kertachto, Vodafone's General manager of Marketing, says "Recharge with $50 and $5 goes into your bonus bank so you can see how quickly you can accumulate money that can be redeemed against a new handset.""If you value your privacy you may not want to be part of a loyalty program" advises Frank.Consumers need to remember there is no such thing as a free lunch the cost of these programs end up coming out in the price of the goods" says Frank Zumbo.