Don’t let rewards slip away from your everyday retail and shopping purchases
Comparison of Retail Rewards Credit Cards
Rates last updated October 21st, 2016.
- Coles Low Rate MasterCard
Purchase rate has been updated from 12.99 to 9.99% p.a.
February 10th, 2016
- Coles No Annual Fee MasterCard
New offer of 0% for 15 months on purchases, which is valid until 31 December 2016.
October 5th, 2016
- Coles Platinum No Annual Fee MasterCard
New offer of 0% p.a. for 15 months on purchases is valid until 31 December 2016.
October 5th, 2016
1. How Do Retail Rewards Credit Cards Work?
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.
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.Back to top
2. How to compare retail rewards credit cards
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-storeYou 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 brandThe 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 discountsThese 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 ratioWhen 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 rateInvariably, 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 expiryA 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.
- Annual feesWhilst 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 daysInterest 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.Back to top
3. How to use a retail rewards credit card
Action you should take with your retail rewards credit card
- Shift some regular bills and purchases to your cardYou 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 pointsJustifying 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 spendingIf 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 transactionsThese 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.Back to top