There s no such thing as free air miles!

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Angelina Weaver
10 years ago
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1 There s no such thing as free air miles! Virgin Money reveals that it costs a pretty penny to get that free flight Research conducted by Virgin Money reveals that South Africans who have opted to join an air miles programme linked to their credit card have to spend, on average, a massive R over six years in order to qualify for a free return flight between Johannesburg and Cape Town, or vice-versa. Over the course of those six years, the average cardholder is hit with R1 524 in annual. When you consider that, with the existing price war between the various low-cost airlines, you can pick up a return flight from Johannesburg to Cape Town for under R1 000, it seems that free flight to visit Great Aunt Maude in Cape Town isn t so free after all! Virgin Money investigated 11 credit card air mile offerings, looked at how much you have to spend, how long you have to wait, and how much in annual you have to pay, to qualify for a return flight from Johannesburg to Cape Town on a variety of airlines including SAA, British Airways (BA) and Kulula. How do air mile programmes really work? Air mile programmes work by awarding you a certain amount of miles or points in return for your credit card spend. Each mile/point accumulated requires a specific amount of money to be spent. You then need to accumulate a certain number of miles/points to be able to acquire your free flight. The spend per mile depends on the individual credit card, but Virgin Money s research showed that this was anywhere between R5,00 and R12,50 per mile. The number of miles/points needed for a return flight between Johannesburg and Cape Town also varied greatly - from miles using the SAA Voyager card to points using Absa rewards to fly with BA. The fact that you have to pay for airport taxes is usually not communicated upfront either when you are redeeming your free flight, and only pops up at the last step of the redemption process when it s just about too late to back out. These taxes can add anywhere between R300 and R750 onto the cost of your free flight. What s even worse, when and if you do eventually qualify for that free flight you still aren t assured a seat on your preferred flight. This is because you now have to be a small print expert to navigate through the terms, conditions, black out periods and exclusions that could apply to your preferred flight. Put it this way you probably won t be able to fly over long weekends, public or school holidays, Christmas, Easter, Cape Argus weekend, or basically any day that you re not alone in thinking how nice it would be to hit the Cape Town Waterfront!

credit card have to spend, on average, a massive R215 000 over six years in order to qualify for a free return flight between Johannesburg and Cape Town, or vice-versa.

2 What it ll take to join the mile high club Virgin Money s calculations were based on industry figures that show the average South African credit card holder spends approximately R3000 on his/her credit card per month. The programme that topped the list in terms of the amount of money needed to be spent, and how long you had to wait to accumulate enough miles to earn a free flight, required you to spend a hefty R , which equated to 11.5 years waiting for the free flight. Great Aunt Maude might not be around by that time! In terms of the overall that would have been incurred waiting to earn the free flight, the worst offender had the unlucky cardholder incurring R2 700 in, over a period of 9 years and 4 months, as they spent R to earn enough miles! What also turned up in Virgin Money s research was the need for consumers to really watch the small print. A number of the programmes insist that the air miles you have worked so hard to accumulate expire after a certain amount of time sometimes even after just six months! What this means is while the average cardholder might be able to get down to Cape Town for free they re pretty much stuck there, unless they dip into their own pockets to fly back! No free lunches Credit card holders think they are getting a good deal, as the message that is conveyed by their banks is that they simply need to spend money and they ll accumulate air miles, says Virgin Money s Gavin Muller. However, what they don t realise is that everything comes with a price, there are no free lunches in the air miles world, and the mere fact that every programme charges an annual fee of some sort, is proof of this. No matter what type of air miles programme your existing credit card offers, the objective of each one is to egg you on to spend as much money as possible on your particular credit card. It s about time card holders are made aware that the free flight they think they are getting will land up costing them thousands of rands. The basic fact of any air mile programme is that everyone experiences a high degree of delayed gratification as they are required to accrue a certain amount of miles before they can be exchanged for a free flight. When this process can take up to 11 years, trying to spend over R200,000 and getting hit with over R1,500 in to earn these miles you need to ask yourself why are you allowing your bank to take you for a ride year after year after year? Virgin Money doesn t charge an annual card or loyalty fee for its credit card. The Virgin Money VIP loyalty programme is uncomplicated. It doesn t require card holders to spend frantically to qualify for a mile or a point, because it offers immediate discounts and instant gratification across a wide range of partners.

The programme that topped the list in terms of the amount of money needed to be spent, and how long you had to wait to accumulate enough miles to earn a free flight, required you to spend a hefty

3 For example, if you book and pay for a flight to London on Virgin Atlantic totalling R5 700 with your Virgin Money Credit Card, directly through Virgin Atlantic s offices in Johannesburg, you ll receive an immediate 10% discount which is R570 off your flight. Evaluate your current credit card free miles offering against these simple questions: Do you have to pay an annual or to belong to the programme? Do you have to pay an annual fee for the credit card that the loyalty programme is linked to? Does your card status determine the size of the reward or the time it will take to accumulate miles? Is the reward limited to availability or capacity restrictions? For example, can you get on to any flight you choose? Are there any thresholds or amounts you have to spend before earning points or miles commences? Do your points expire after a certain time period? When last did you redeem your miles? For more information on how you can become part of the Virgin Money VIP world contact Virgin Money on 0860 VMONEY (866639) or visit Virgin Money South Africa - tribeca public / [email protected] [email protected] [email protected] [email protected]

Evaluate your current credit card free miles offering against these simple questions: Do you have to pay an annual or to belong to the programme?

4 Card type Annual fees per Average Spend per mile Miles / points Card spend required to Time taken to Total amount year monthly required for a qualify for free flight accumulate charged in card spend free domestic (Cost per mile X Miles points annual fees over flight required for free flight) this time Standard Bank s R205 card fee with R3 000 R7, on British R months or 6,25 R1 435 British Airways (BA) BA miles linkage Airways years = 7 annual miles Nedbank Greenbacks R110 card fee R3 000 R12, on SAA R months or 9,4 R2 700 miles programme with R160 for Nedbank years = 10 annual SAA Voyager Greenback linkage Nedbank Greenbacks R110 card fee and R3 000 R12, on Kulula R months or 8,7 R2 430 miles programme with R160 for Nedbank years = 9 annual Kulula.com Greenback linkage Discovery Card R135 card fee R3 000 R7, on SAA R months or 5,5 R1 860 Voyager miles R175 Voyager years = 6 annual programme FNB s ebucks Kulula R145 silver credit R3 000 R10 eb9980 to fly JHB R months or 2,8 R885 miles offering linked card annual fee CT return years = 3 annual to an FNB credit card R150 ebucks annual fee SAA Voyager Classic R300 card fee R3 000 R R months or 3,3 R1 200 credit card American includes a loyalty years = 4 annual Express SAA Voyager Classic R300 card fee R3000 R12, R months or 6,25 R2 100 credit card - Visa includes a loyalty years = 7 annual Kulula credit card R150 annual card R % Kulula R998 to fly JHB R months = 1 R150 fee Moolah is R90 CT Town return annual card fee p/m towards Moolah Miles Absa rewards miles R86,40 including R3 000 R points to R months or 11,5 R1 032 offering card and loyalty fly JHB CT on BA years = 12 annual

435 British Airways (BA) BA miles linkage Airways years = 7 annual miles Nedbank Greenbacks R110 card fee R3 000 R12,50 27 100 on SAA R338 750 112 months or 9,4 R2 700 miles programme with R160 for

5 American Express Membership Rewards with Kulula R145 annual Blue card fee R160 per year Membership Rewards fee R3 000 R points R months or 3,5 years = 4 annual American Express R145 annual Blue R points = R months or 7,5 Membership Rewards card fee Voyager mile = years = 8 annual with SAA R160 per year R10 Membership Rewards fee Average R254 per annum R3 000 R8,95 N/A R months or 6 years = 6 annual Appendix One - Research findings Table format R1 220 R2 440 R1 586

or 7,5 Membership Rewards card fee Voyager mile = years = 8 annual with SAA R160 per year R10 Membership Rewards fee Average R254

Discovery Miles terms and conditions

Discovery Miles terms and conditions What are Discovery Miles? Discovery Miles is an e-currency you earn for all qualifying transactions on your Discovery Card if you have activated the benefit. Only Discovery