Retail Rewards Credit Cards Comparison
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 Gem Visa Credit Card offers 6 month interest free on purchases over $250. Also, get access to long term interest free periods with 9,000 partner stores.
- $99 p.a. annual fee
- 6 months interest free on any Visa purchase over $250 (reverts to 22.99% p.a.) on purchases
- Cash Advance Rate of 22.99% p.a.
- 55 days interest free
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. Often this credit limit is not high enough to make a purchase for an expensive item. Although some credit limits are rather high, this is becoming rarer. If you do not often use the credit card it is even more rare for it to have a high credit limit. This in many cases rules the credit card out as far as purchasing large items like a car or a set of furniture.
Credit limits can often be extended. This may only be for a short period of time. However, if you explain the situation of needing a higher credit limit so that you can purchase expensive items, you may have a good chance for the increase in your credit limit. If the first person you talk to cannot extend your limit, ask to speak to a manager who might have the power to increase the line of credit.
Failing that, another thing that can be done is to apply for a credit card with a higher credit limit. When you do this and are planning on using the card for purchase of large items, try to apply for a cash back card. Some of these offer as much as 5% during their introductory offer period. If you are planning on spending several thousands of dollars on expensive items, this can amount to a great deal of cash back.
If you can not get your credit limit increased, and you do not have the time to apply for a new card, consider spreading the cost of the item over several cards that you already possess. Credit cards have some advantages when making a large purchase. If you use a card that has a zero balance, you will have an interest free period. By the time the payment comes due, you may either pay it off, or switch it to an alternate payment method.
This can even be to a balance transfer card that you have taken out for this purpose. A balance transfer card will give you very low interest rates (sometimes even 0%) for a six, nine or twelve month period. This way you can pay for your large purchase and pay a minimal amount of interest.
As you can see there are several innovative ways that a credit card may be used to purchase your expensive items. You need only to be creative, and they will be invaluable if used in the right way. You may come out of making your large purchase and never have to pay any interest even if it takes twelve months to pay for it.
Variations On A Theme:
So what can you expect with a retail rewards credit card? The more general concept is that you earn points for the dollars you earn. The usual is one point per dollar spent, no matter where you spend your money. These points can then be exchanged for air miles, cashback, or shopping vouchers at affiliated retailers. The unknown quantity without researching a specific rewards scheme is the redemption value of the points once you have them. Knowing how many points equals a dollar does not say anything about how those points are then translated back into dollar value upon redemption.
If we are referring specifically to a retail rewards credit card, then the three main ones in Australia at the moment are the Myer Visa credit card, the David Jones American Express credit card, and the latest addition, the Woolworths Everyday Money credit card.
The best way to understand how these work is to take a look at some of the features of each. One thing they all have in common is that you can earn points no matter where you shop, but you will earn more at the home store, and the net result of your points is that you will receive vouchers to spend in the home store. Clearly, as the rewards are tied to the one retailer, that retailer will need to offer a vast choice of products to lure the customer into taking their card in the first place. You are extremely unlikely to see Bob’s Fishing Tackle Shop American Express credit card anytime soon.
A recent Choice survey found that the Myer Visa and David Jones American Express cards scored well as rewards cards. For people spending $1000 to $2000 a month, the Myer Visa was best value, and for those spending between $2000 and $5000, the David Jones card offered a better reward system. The newest retail rewards credit card, the Woolworths Everyday Money MasterCard, was judged to be the most versatile of the three as there were more options when it came to points redemption.
- 3 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.
- Introductory offer of 15,000 bonus points for spending outside a David Jones store within seven days of receiving your card – equates to $100 worth of David Jones Gift Cards.
The Myer Visa Credit 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 $39.
- 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 any number of stores under the Woolworths group umbrella.
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.
How Do I Earn Retail Rewards?
By spending. It’s that simple, however you should always be aware that any points earned will be more than wiped out by any interest you will pay if you fail to pay off your balance in full every month. 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 not only the banner headlines, but also the fine print. You must also realise that this term covers a wide range of rewards credit cards. Even though there is a fairly specific definition of a retail rewards credit card, this can be lost in the general mix. Other names your may see are supermarket rewards credit cards, gift voucher rewards credit cards, shopping voucher rewards credit cards, and loyalty credit cards. Other variations will no doubt exist, or will soon be concocted.
There is not much point trying to deal with the specifics of each of these labels, as there can be great variations within the same. Most rewards credit cards have affiliated retailers whose products may be discounted upon purchase with a certain card, or that offer store shopping vouchers as a points redemption option. However, there may also be the option of air miles or cashback. In this respect, depending on the audience, they could also be called frequent flyer rewards credit cards or cashback credit cards.
Are you starting to get confused yet? The main point is not to be too thrown by the titles. They will chop and change according to which section of society is being targeted in a specific marketing campaign. Your challenge is to investigate in detail any credit card rewards scheme that catches your eye, no matter what the provider calls it.
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. The main three in Australia at the moment are the Myer Visa credit card, the David Jones American Express credit card, and the latest addition, the Woolworths Everyday Money MasterCard .
What Should I Expect From A Retail Rewards Credit Card?
To be tied to a certain store:
You will have the opportunity to earn points no matter how or where you spend on your credit card, but your redemption of points will be restricted to the store whose name is on the credit card. This is true of the above three, 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 shopping with your vouchers or gift cards.
To earn more points for loyalty to the brand:
The number of points your earn per dollar will depend upon where you make your purchases. You should earn more points for shopping in-store than at other locations, although all spending should count.
Intermittent 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, but at a thankfully lower rate of interest.
What Should I Look For In A Retail Rewards Credit Card?
A good points-to-rewards ratio:
You may earn ten points per dollar, but that is practically useless if it takes a million points to buy a bag of peanuts. Rewards need to be realistic, achievable and worthwhile.
The regular APR:
Don’t forget this in your excitement about free shopping vouchers. If your spend beyond your means one month and you cannot pay off your balance in full, then the interest rate on your card becomes very relevant. Interest charges will also make any points earned null. If that is unavoidable due to necessary purchases, then so be it, but overspending to the point of paying interest just to earn some extra points is a nonsense. Think of a fairground stall where you get so caught up in the challenge of shooting a line of ducks with a bent rifle that you end up spending $50 for a $2 teddy bear.
Cap and expiry :
You don’t want to see these in the small print. 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.
Whilst an annual fee for the credit card itself is pretty standard, you should be wary if a fee is charged to be a member of the rewards scheme. A recent survey by Choice, looking at over sixty rewards credit cards, found on average that if you are paying a fee and you are spending less than $1,000 a month on your card, then you will be out of pocket. When you compare retail rewards credit cards, any fees should make you pause for thought until you are satisfied they are perfectly fair.
If these are not offered, there is something wrong. This is an industry standard that very few cards are lacking.
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.
If you expect to make any points on a retail rewards credit card from cash transactions or balance transfers, you are going to be disappointed. These are not counted as qualifying transactions.
How you use a retail rewards or supermarket rewards credit card may be slightly different to how you would use a regular credit card. It all depends on how you want to organise your spending, how keen your are to rack up points as soon as you can, and how confident you are in your ability to clear your balance every month.
These are the key points to remember when using a retail rewards credit card:
Actions You Should Take With Your Retail Rewards Credit Card:
Make purchases on your card:
If you have gone to the trouble of making an application, you may as well try to earn a few points on your card when it arrives. You may even be rewarded two- or three-fold for making some early purchases with your new card. Retail rewards credit cards tied specifically to one store, or several stores under one umbrella, will often pay you more points per dollar than if you were to shop elsewhere. If you are able to make the same purchase at the named store, it is clearly sensible to do so and earn more points in the process.
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, cashback 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, and a cash handling fee into the bargain.
A retail rewards credit card, or a supermarket rewards credit card, or whatever name your scheme may trade under, is only useful to you if you obey the golden rule: clear your balance in full every month. If you are doing this, then your shopping vouchers are a free gift from your card provider.
The Truth About Store Credit Cards
Store credit cards are exactly as they sound- credit cards specific to a retail store. Many retailers offer these credit cards each with their own set of features and benefits. For the most part, they are all the same at their core.
A credit card is a simple tool for enhanced purchasing power. It allows you to make purchases without needing to have the cash to make that purchase at the time. At the end of a predetermined period a payment is required on that credit balance. Any remaining balance not paid is charged interest at a specified rate. At any time that balance can be paid off, thus, no longer earning interest.
A store credit card functions much the same way with one distinct caveat- most of them allow purchases only to be made at the store that issued you the card. Some of these store credit cards are backed by much larger companies like Visa or MasterCard which allows you to make purchases elsewhere.
There are some very basic benefits to using a store credit card as well as some big risks. Let’s take a look at some of those benefits and risks.
Store Credit Card Benefits
Credit card companies earn money by collecting interest on purchases. A retailer, so too, can earn income by offering lines of credit through store credit cards and then charging interest on these purchases. It makes sense for retailers to offer store credit cards to their shoppers as their potential to earn on interest is quite high.
To incentivize these credit cards to shoppers, often 0% interest will be offered for a certain period of time. Occasionally offers of no payments for a year or two will also be made.
Although the retailer may be losing money during these periods it is still beneficial for both you and the retailer to use the credit card during these periods of 0% or no required payments. During those periods of time, you do not accrue interest are do not even have to make a payment should your budget fall short.
Store Credit Risks
Although these offers are compelling, with 0% interest or perhaps no required payments for a year, they often come at a high cost.
When the 0% interest period is up, often what you will find is that the interest rate on the card skyrockets to a rate much higher than your average competitive card. To offset these 0% interest periods, the normal interest rate on the card is quite high.
After a period of no payments required, sometimes there is a policy that says should the balance not be paid in full at the time, the entire amount financed at the beginning of the period is subject to interest for the duration. Suddenly you are left with a gigantic balance amounting mostly of accrued interest.
Needless to say, there is lots of fine print associated with these cards and when applying for them, the best practice is to understand the terms both during and after promotional periods.
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