Archive for November, 2009

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This card makes no sense to me at all

November 29, 2009

Recently Kiwibank sent me a leaflet along with my credit card bill, suggesting that I obtain one of their new “Go Fly” cards. The Go Fly card is one of those reward point jobs — in this case, you get a certain number of Air New Zealand Air Points for every umpty dollars you spend on the card. Just how many depends on what particular flavour you have. There is a special twist in that you can pool your air points with other people if you want, so the family can club together to get little So-And-So a ticket to visit Granny if they want.

This is an interesting proposition for me, because I spend a lot of money on plane tickets. I fly my daughter over from Australia at least four times a year, we travel to visit Kathy’s family several times a year, and there’s the odd trip for funerals and weddings and other important events.

So I was frankly a bit disappointed. Have a look.

If you pay $56 a year for a plain card, you get one airpoints dollar per $120. So to get enough air points for, say, a return trip from Wellington to Auckland ($260), you would have to spend $31,200 on the card.

And you paid the fee, so ¬†you’re really only getting a $200 win.

And if you spend $31,200 in one year, that means you’re putting $2,600 a month on your credit card. Now I think that between us, Kathy and I are on a pretty good wicket, but we would struggle to do that over two months, even though I try to put everything possible on the card.

And if you were to not pay the card off in full, the interest rate is a stonking 18%, which isn’t nothing with your huge monthly balance that you’ve apparently racked up.

(I do this because our main account gets credit interest, so it makes sense to keep its average balance as high as possible and pay the card off every month to avoid interest charges. There are no transaction fees for credit cards, so it’s win all round).

I compare this with the Mastercard Zero, which is the card I currently have, and I just cannot understand who this Go Fly card could possibly make sense for. Anyone with any sort of normal household would be much better off with a Zero card (no fees) and saving the $56 fee and sticking $20 in a tin every month — and then if you change your mind, you could spend your savings on something else instead of a plane ticket.

It’s especially peculiar because Kiwibank must know how we normally use the credit cards. Were they expecting I would suddenly become a debt junkie for a free plane ticket up the island?

Dear readers, are there any credit cards with unusual features that are actually worth having? By which I mean, the benefit outweights extra fees or higher interest rates?