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?



  1. I have a very ordinary very modest limit credit card with the BNZ which you earn flybuys on. You don’t pay extra fees for that feature. 24 Flybuys points = 1 airpoint $

  2. I did a similar calculation when we were “invited” to get an Amex card, and for only $100 or something, we’d turbo boost it. It was very similar, you had to spend a brazillion dollars to get a ticket to somewhere that would be supercheap anyway. Lame.

  3. I have a National Bank Thoroughbred Visa which gives you 1% cashback at the end of the year. So if you spend $30000 you get $300 credited to your account.

    I think 1% is the portion of the merchant’s fees that they can use to cover reward schemes. So the rewards will work out to around that amount. NBNZ just gives the money back to you (and probably avoids administration overheads of more complex schemes).

    Of course it never makes sense to spend money just to get a reward. But if you’re going to use your credit card anyway, why not get something back for doing so?

  4. I have one of the Go Fly cards, and before that I had a BNZ Flybuys card, which is much the same deal, only with Flybuys instead of Airpoints.

    The thing about the reward cards is that they’re aiming for a completely different section of the market than any of the low rate cards are.

  5. yup. i find those rewards systems are largely useless. the only real benefit accrues to the “rewards” people, who get huge volumes of data on your spending habits.

  6. I find it odd that they’d charge a fee in return for offering an airmiles reward. I guess the dire lack of competition in the NZ banking market is the reason for this.

    In the UK there are no fees on credit cards. There are a number of websites like http://stoozing.com/ which advise you on the best cards for the most gain, eg. 0% purchase or balance transfer rates. Stoozing is the process of moving your debts from one 0% credit card to another (effectively a low interest loan) and is popular with some consumers.

    The main thing with credit cards is to pay the balance off every month so you don’t have to pay the excessive interest rates.

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