To calculate the value of FlyBuys, there are three things we need to know:
Actual value to youA. Your spend
= [A. Your spend] x [B. Reward point earn rate] x [C. Value of a point].
Flybuys points can be accrued at major Coles brands: Coles, Kmart, Target, BiLo and Liquorland. The amount of spend obviously varies for each person, but (at the risk of exposing the author's alcoholism or penchant for expensive deli goods) the author of this post has calculated his total spend at Coles and Liquorland for the previous 12 months as $978, so let's use $1,000 as a plausible annual spend.
B. Reward point earn rate
It's 2 points for every $5 - or 0.4 points per dollar.
C. Value of a point
Again, this depends on what you redeem with your points. Ironically, Flybuys' travel rewards are pretty average - domestic travel is available with Qantas or Virgin Blue, but international travel is very limited. All Qantas travel still incurs taxes, etc. We've calculated that redeeming points for a return trip to Brisbane equates to a point value of about $10 per 1000 points* (or $0.01 per point). FYI: Redemption for vouchers and other rewards is also possible, but equates to a point value of about $6-8 per 1000 points - a few dollars less than flight redemption.
*For you data-geeks out there: return flights to Brisbane is 22,500 Flybuys points PLUS taxes with Qantas. The same flight through the Qantas website is $225.05 PLUS taxes. Therefore 22,500 points = $225.05, which can be reduced to roughly 1 point = $0.01.
So, returning to our formula above:
Actual value to you
= [A. Your spend] x [B. Reward point earn rate] x [C. Value of a point]
= $1000 x 0.4 x 0.01
The Horrible Truth
Yes, you read that correctly.
In our example, Flybuys will return about $4 worth of rewards per annum.
Don't be generous with your trust. When an offer is confusing enough that you give up doing the math in your head, consider it a red flag.
Our goal is Prosple is to help cut through the crap. That's why we have this blog, and that's why we are working furiously building a tool that can help you make decisions like these 24/7. For credit cards, for example, we put all available cards on a level playing field and produces a simple $ amount that each card will ultimately mean to you given your situation. You don't need to think through reward points, annual fees, interest rates, signup bonuses, etc. We're really excited about it because there's nothing like this in Australia (but more on that later!).
Got a Question?
This post came about in response to a reader's question. Have you got a question that you're quietly sitting on? Hit us with it! We'd love to know what information you all need to dominate your financial life in this complex (and often manipulative) commercial world.
Until next time!