From car insurance to banking, Coles and Woolworths are no doubt branching out and looking to emulate their success in new fields. And with their big brand names and financial backing, we wonder if the banks are trembling in their boots over the arrival of the new Coles No Annual Fee MasterCard.
Offering credit cards is not necessarily new for the supermarket giant with the Coles Rewards MasterCard already on the market. What makes this new credit card stand out however, is that Coles’ research showed customers thought rewards credit cards were too expensive so it has launched the Coles No Annual Fee MasterCard.
Rewards credit cards often dazzle credit card owners with the generous rewards that can be earned on their shopping spend but many don’t realise that the high annual fee can often mean they will need to spend hundreds of dollars before their rewards earned positive value.
So how does the Coles No Annual Fee MasterCard compare?
The new card has no annual fee and a lower purchase rate (17.99% compared to 19.99% of the Coles Rewards MasterCard). Although you won’t pay an annual fee, you’ll earn just 1 Flybuy point for every $2 spent. With the Rewards MasterCard you get 2 Flybuys points per dollar spent.
We put an annual credit card spend of $20,000 into Mozo’s Rewards Revealer and compared the value of the rewards earned minus the annual fee, for shopping gift cards rewards and here’s what we found:
Surprisingly, it wasn’t the Coles No Annual Fee MasterCard that came in at first place but the the Coles Rewards MasterCard, with $151 rewards value. By comparison, the new Coles No Annual Fee MasterCard came in at number 7, with a rewards value of $100.
When lowering the annual spend to just $10,000 per annum the new Coles No Annual Fee MasterCard moved into fourth place (American Express topped the list) but was again outdone by the Coles Rewards MasterCard for overall rewards value.
It was only when we got down to spending $4000 a year that the Coles No Annual Fee MasterCard came out on top. But at this level the rewards points would earn you just $20 off your groceries in a year.
Of course the lower purchase fee of the Coles No Annual Fee Mastercard would make it a cheaper card than the Rewards MasterCard if you don’t pay off your balance in full each month. But as we have blogged about in the past if you don’t pay off your balance in full each month you should forget rewards credit cards and get a low rate credit card instead. Paying 5% less interest will add up to much more money saved than a free leg of lamb once a year.