A retail rewards credit card is a type of credit card that offers points for spending on your credit card. You would be forgiven for thinking that sounds like a plain old credit card rewards scheme. In some cases it may be just that. Credit card providers like to put a new spin on their products to get your attention. In some cases this may be a new concept, in other cases it may simply be a name change. A retail rewards credit card may also be known as a supermarket rewards credit card or a shopping voucher credit card or a loyalty credit card.
Retail Reward Credit Card Offer
The Coles Rewards Mastercard allows you to shop and earn 2.00 flybuys points per $1 spent. Take advantage of the long interest free period of up to 62 days on purchases.
- $49 p.a. annual fee
- 19.99% p.a. on purchases
- 0% p.a. for 6 months on balance transfers
- Cash Advance Rate of 19.99% p.a.
- 62 days interest free
- Minimum Income Requirement of $15,000 p.a.
Table of Contents: Guide to Rewards Credit Cards
- Compare retail rewards credit cards
- Which is the best retail rewards credit card?
- How do retail rewards credit cards work?
- How to compare Retail Rewards Credit Cards
- How to use a retail rewards credit card
A credit card has a spending limit on it. Called a ‘credit limit’, it is assigned to cardholders based on their financial details and capacity to repay debt. Some credit card users like a small credit limit, so that there credit card spending doesn’t get out of control, while at the other end of the spectrum, some credit card users like a high credit limit because they have the necessary financial discipline and they wish to put big ticket items on their retail rewards credit cards — earning masses of reward points in the process.
Credit limits can often be extended, especially for customers who’ve had the card already for some time and have kept up with the minimum repayments. Contact your credit card provider to request any change to your credit limit.
If you want a large credit limit, apply for a credit card with a high maximum credit limit. Premium cards such as platinum credit cards typically have high credit limits to suit high-spend customers.
Variation on a theme:
A retail rewards card is really just a variation of a proven formula — the rewards credit card. A retail rewards card pushes the envelope by further rewarding you for the spending you already do at your favourite store. So what can you expect with a retail rewards credit card? Earning rewards points can then be exchanged for air miles, cash back, or shopping vouchers at affiliated retailers. Points earned per dollar spent varies from card to card; so it is worth exploring in detail by clicking on a card you like to discover the specific offer.
The bonus with a retail rewards credit card is that you earn rewards points outside of the store the card is named after. So it operates in a fairly similar way to the regular rewards cards you may already be familiar with.
The David Jones American Express Card:
- 3.00 gift points per dollar at millions of places around the world
- Two points per dollar shopping in-store at David Jones
- Exchange gift points for David Jones Gift Cards
- No points capping or expiry
- Receive 30,000 Bonus Membership Reward points or 22,500 Qantas Points when you spend outside of David Jones three times within the first month of receiving your Card
The Myer Visa Card:
- Earn three Myer shopping credits per dollar in Myer stores
- Earn one Myer shopping credit per dollar everywhere else — at over 30 million locations worldwide.
- Every 2000 Shopping Credits = $20 Myer Gift Card
- Introductory offer of $200 worth of savings vouchers
- Up to 62 days interest-free on purchases.
- Regular interest-free offers
- An annual fee of $69
Woolworths Everyday Money credit card:
- Three points per dollar you spend on Woolworths Select products bought at Woolworths or Safeway Supermarkets, but not online.
- Two points per dollar you spend on other products purchased at Woolworths or Safeway Supermarkets, Big W, Caltex Woolworths/Safeway co-branded fuel outlets, epump, Woolworths/Safeway Liquor, BWS, Dan Murphy’s, Thomas Dux, and participating Dick Smith and Tandy stores.
- One point per dollar you spend on other purchases
- Points redeemable for shopping cards for use at Woolworths group stores
This should give you a fair idea how retail or supermarket rewards credit cards work. Your job is to choose one that most closely matches your needs and the way you regularly shop.
American Express David Jones
Coles Rewards Mastercard
|Purchase Rate (p.a.)||20.74% p.a.||19.99% p.a.|
|Balance transfer rate (p.a.)||0% p.a. for 6 months|
|Cash advance rate (p.a.)||19.99% p.a.|
|Interest Free Days||44 days||62 days|
|Fees & Charges|
|Annual Fee||$99 p.a.||$49 p.a.|
|Late Payment Fee||$30||$25|
|Over Limit Fee||$15|
|Overseas ATM Withdrawal||$5|
|Foreign Currency Conversion Fee (MC)||2.5% of transaction value|
|Foreign Currency Conversion Fee (AMEX)||3% of transaction value|
|Gambling Transactions Allowed||No||No|
|Additional Cardholder Fee||$29|
|Number of Additional Cardholders||1||9|
|Minimum Age||18 years of age||18 years of age|
|Available to Temporary Residents||No||Yes – Conditions apply|
|Credit Rating Requirement||Good||Good|
|Min Credit Limit
This is the lowest credit card limit that you can request. It is possible to apply for a higher credit card limit but not a lower one than this figure.
|Max Credit Limit||$30,000|
How do I earn retail rewards?
By spending money on eligible purchases as outlined by your credit card provider. It’s that simple. However, keep in mind that many people would be better off financially with a low interest rate credit card if they don’t repay their balance in full each month — as the interest rates on rewards cards are higher. Use a retail rewards credit card wisely and it is an excellent method of creating a little extra spending power for yourself.
When you compare retail rewards credit cards, you need to check beyond the advertising. Fine print is just as important.
Narrowing this down a little, we’ll take a closer look at retail rewards credit cards that exclusively offer retail vouchers in exchange for the point you accumulate.
What should I expect from a retail rewards credit card?
Encouragement to spend in-store:
You will have the opportunity to earn points no matter where you spend on your credit card, but your redemption of points can be restricted to the store whose name is on the credit card. This is true for the cards mentioned above, although the David Jones card does also have an option on travel rewards with Qantas and other airlines. Thus, your main focus when you compare retail rewards credit cards should be on whether the store offers you the kind of products you would like to take home with you, because that’s the store where you’ll be spending your rewards.
To earn more points for loyalty to the brand:
The number of points you earn per dollar will depend upon where you make your purchases. You should earn more points for shopping in-store than at other locations.
Short-term offers and discounts:
These should come your way at regular intervals, so that you can earn more points for a limited period, or perhaps by purchasing certain items. You can also reasonably expect that discounts are applied to selected products in-store that are purchased with your affiliated credit card. In this respect, a retail rewards credit card can operate very much like a store card.
What should I look for in a retail rewards credit card?
A good points-to-rewards ratio:
When shopping around for a retail rewards credit card, it is important to look into how many points are needed to purchase items that you desire. Rewards points aren’t created equal, so it is worth making a comparison of the rewards value of competing cards.
The purchase interest rate:
Invariably, the purchase interest rate will be higher on a rewards credit card than any low rate credit card counterpart. Rewards cards are usually only financially rewarding for consumers who pay their balance in full each month.
Cap and expiry :
A cap on your points means you will not be able to earn more than a certain amount in any year. This punishes you if you are a high spender. Similarly, an expiry date on your points penalises the low spenders who may have to exchange their points for a lesser reward. Worse, if you forget that your points are about to expire, they may end up disappearing for ever. Some cards have neither of these conditions, but it is worth checking. You’ve been warned.
Whilst an annual fee for the credit card itself is pretty standard for a rewards credit card, you should be wary that a fee can also be charged to be a member of the rewards scheme.
Interest free days gives credit card users a chance to balance their balance before interest is applied. However, please be aware that there are no interest free days if you carry a balance from the previous month.
Is a retail rewards credit card for me?
That depends on whether you want to be tied to a certain retailer for your rewards. If not, then you should be looking at a more general rewards scheme that offers a wider range of redemption options. If you know your credit rating is not so hot, you may want to think twice about even making an application. These cards require a sound credit rating, and every application you make will be logged in your history, whether successful or not.
Action you should take with your retail rewards credit card:
Shift some regular bills and purchases to your card:
You will be spending hundreds or even thousands of dollars each month that earn you nothing back. Anything you use cash, a debit card, or a direct debit to pay for could potentially be moved to your credit card to earn points. This action is, however, fraught with danger if you do not set aside the cash you would have used. This will be needed to cover your credit card debt at the end of the month.
Actions you should avoid with your retail rewards credit card:
Spending just to earn points:
Justifying an unnecessary purchase on the basis that you have earned some points is poor thinking. Not only could you end up with a purchase of little value, but you may take your balance into an area that you cannot pay off in full.
Losing track of your spending:
If you have any doubts about your ability to manage a larger credit card bill, or to balance any sudden large shift from cash to plastic, then putting your everyday bills onto your retail rewards credit card would be very unwise. Your balance needs to be paid off in full each month for your points to be of some benefit. If you end up paying interest, you have lost the game.
Making cash transactions:
These include cash withdrawals from ATMs, cash back at a cash register, traveler’s cheques and foreign currency, and gambling transactions. These will not earn you points, but they will earn your a higher rate of interest from the moment they are made, as well as a cash advance feel.
Store credit risks
Know that the rate of interest following an introductory low purchase interest rate or balance transfer offer is usually very high — often in the region of 20% p.a. or so. Consumers need to be diligent working towards repaying their debts before a big interest rate swoops in.