Kiwis Still Keen On Credit Card Rewards, Despite Value Drop — Survey
A large majority of New Zealanders still appreciate credit card reward schemes, even after a major devaluation by banks, according to a new survey.
Prompted by the introduction of a cap on credit card transaction fees in November 2022, most banks significantly reduced the points-earning potential of their rewards credit cards to balance out the loss in revenue.
The move angered many customers at the time, but Banked’s latest credit card survey report shows that anger has largely dissipated. The personal finance website found that 81% of New Zealanders think that credit card rewards such as Flybuys, Airpoints, and hotpoints still offer good value.
“The rewards offered by many credit cards took a major knock following the Government’s introduction of a credit card transaction fee cap. But the banks that made those cuts will be glad to see that Kiwi consumers still see good value in their reward card offerings,” says Kevin McHugh, Head of Publishing at Banked.
Banked’s research found that younger people in particular appreciate credit card rewards schemes, with 91% of Gen Z and 89% of Millennials believing they offer good value. That drops for older demographics with 70% of Gen X and 51% of Baby Boomers feeling the same way.
Examples of rewards devaluations include ANZ increasing the required spend to earn 1 Airpoints Dollar on its Airpoints Visa from $130 to $170. BNZ has since weakened the points earning potential for its Advantage Visa Platinum from a required $15 spend to earn 1 Flybuys to $20. Kiwibank and Westpac made changes similar to their rewards card offerings.
Banked’s survey also found that while Kiwis still value rewards, they are not the most crucial factor when assessing credit cards. Over a third (35%) say the most important feature of a credit card is a low interest rate and fees.
A quarter of Kiwis (25%) say rewards are the most important feature, while 17% say it's a long interest-free period on purchases. Benefits and perks (such as free travel insurance) and a good deal on balance transfers are less popular with 12% and 7% naming those as the most important feature, respectively.
“For people that don’t pay off their balance in full each month, a credit card with the lowest possible interest rate is the smart choice,” says McHugh.
“Rewards for spending on your credit card may be appealing, but they’re only worthwhile if you make the full payment as interest fees will always outweigh the benefits of any potential rewards you might earn.
“Our latest survey suggests that many recognise that fact and are making the sensible choice when it comes to their choice of credit card.”