Frequent flyer points: buying goods can help control living costs

People with stashes of frequent flyer points may be tempted to use them to help combat the cost-of-living crunch. But does it make financial sense?

Frequent flyer points have piled up in Australians’ accounts as travel took a back seat to Covid while credit cards, supermarkets and other reward programs continued to churn out points.

Qantas and Virgin’s reward stores have thousands of items that can be redeemed ranging from gift cards to tents and trampolines, with many shipping within days.

However, the big question facing consumers is whether redeeming points is worth it, considering the value of a frequent flyer point can be up to 10 times higher if used for flights rather than goods or gift cards.

The Champagne Mile founder Adele Eliseo says Australians built “significant points balances over the past three years despite having limited opportunities to fly”.

“While flights are almost always the best way to use points, in some scenarios, it might make sense for Australians to put those points towards Christmas expenses,” she says.

“For example, using points for gift cards or at an airline rewards store could make sense for frequent flyer members who aren’t yet ready for travel, or for people who need to register some form of qualifying activity to prevent the expiry of points.

“Since the cost of flights has increased significantly through the pandemic, more than ever, using points for reward seats offers the best way to extract maximum value.”

FLIGHT VALUE

Surging demand for air travel has made reward flights harder to find, but if you can land one, the value is significant.

Adele Eliseo from The Champagne Mile suggests checking for points promotions.

International flights deliver 5c or more of value per reward point, Eliseo says, while domestic travel delivers between 3c and 5c of value.

In contrast, gift cards and online store redemptions are worth 0-5c-0.6c per point, while accommodation or rail journeys can extract 1c or more, she says.

“The value can sometimes be higher during promotions, so frequent flyers looking to cash in their points in this way should keep an eye out for offers.”

Despite the differences in point values, Australians are flocking to reward stores, and for many this helps ease household cost pressures and provides immediate benefits.

Velocity Frequent Flyer CEO Nick Rohrlach says the most popular brands on the Velocity e-store include eBay, Chemist Warehouse and Apple, and the most popular redemption item is gift cards.

“We know that cost of living is putting pressure on Australians, especially in the lead up to Christmas,” he says.

“Whether using Points to redeem on flights, via the Velocity Rewards Store, e-Store or with our great partners, we’re seeing strong demand across the board.”

Rohrlach says Velocity recently repriced its reward store, allowing people to purchase more with less points.

Velocity’s online store does not show the corresponding dollar figures of items for sale, while the Qantas rewards store does.

VOLUME BOOM

A Qantas spokeswoman says during late November it saw three times the usual volume of redemptions on the Qantas Points store, and last financial year its members earned a combined 118 billion points.

“Ahead of this Christmas, the most popular items at the Qantas Rewards store are wish list gifts like Apple Air Pods, Dyson hair dryer or Weber barbecues,” she says.

“We have a number of pre-Christmas promotions where our members can save up to 40 per cent off when using Qantas Points.”

Natalie Joyner, pictured with her dog Ziggy, is happy to use points to buy products. Picture: Dean Martin

Natalie Joyner is using frequent flyer points to help cover the cost of Christmas, including buying a hair dryer.

“Using points for products rather than flights doesn’t bother me as with products you feel like you have something in your hand to show for it,” she says.

“Travelling is still a bit precarious and you worry if you use your points for flights the flights could still end up being cancelled.”

HOW TO MAXIMISE POINTS

• There are countless ways to earn frequent flyer points through credit cards, shopping, banking, travelling, insurance and even having a healthy lifestyle.

• Look for bonus point details and use apps and websites to find program participants.

• Points can be doubled up by shopping at retailers to get half a point per dollar spent, then paying for the purchase with a rewards credit card that also delivers points per dollar.

• If redeeming points for goods, research to check they are not on sale elsewhere for a much cheaper price, and whether the rewards store itself has discount promotions.

• If redeeming for travel, plan early and try to be flexible with dates and routes.

Originally published as Frequent flyer points: buying goods can help control living costs