Merchandise out, cashbacks in: Westpac changes credit cards rewards

Westpac has revised its credit card rewards system to better align with evolving customer preferences. Instead of allowing the use of credit card points for purchasing merchandise, the bank now offers cashback incentives. These cashback offers are tailored to individual customers and include benefits like $50 credited to accounts after a minimum $300 purchase at Michael Hill, $5 back on a $50 spend at JB Hi Fi, or $10 back on a minimum $35 at The Coffee Club.

The cash is automatically added to the customer's account when they make eligible purchases. Westpac New Zealand's managing director for product, sustainability, and marketing, Sarah Hearn, stated that the bank conducted research to understand changing customer habits and desires. She believes the new system makes the rewards more relevant to customers' spending habits, interests, and daily utility.

Hearn also mentioned that the decision to remove merchandise as a reward option was made in late July, as only 7 percent of redemptions involved merchandise. Westpac data indicates that 38 percent of New Zealanders have a rewards-earning credit card, with another 34 percent open to the idea. Men and women both show interest in personalized cashback offers.

Banking expert Claire Matthews noted that cash is more appealing because it's more flexible and useful for everyday expenses. She also suggested that merchandise may become less attractive due to inflation and the potential for higher prices. Consumer NZ has warned that rewards points are only beneficial for heavy credit card users, and those with lower spending may be better off with low-fee cards.

Westpac's Simon Macdonald highlighted that the new cashback offers benefit customers regardless of spending levels, as they provide access to various merchant-funded rewards.