Woolworths Offers “Fresh” Financial Services with Credit Card Launch

The new rewards card targets consumers looking to earn rewards from everyday purchases on groceries, petrol, or other common household products from Woolworths or any other retailer.

Why Woolies, Why?

What would entice a retailer like Woolworths to issue their own credit cards to consumers rather than outsourcing? Is it just about the profit potential?

No.

It’s all about the data. Information on consumer spending is a goldmine for retailers. While grocers worldwide have issued store discount cards or club cards for years to shoppers allowing the companies to track in-store spending, Woolworths’ new credit card will enable them to track what their customers are buying not only in their own stores, but anywhere the card is used.

When retailers know what their customers are buying, as well as not buying, they’re able to better track the success of their marketing efforts and tailor future campaigns to regional or even individual customers more efficiently.

The marketing data available through credit card purchases is the reason for the rush of supermarkets and other retailers to get into the credit card business (especially before the holidays), with the trend expected to grow.

To be fair we have to note that they do give cardholders the chance to opt out of the detailed data collection.

What the Financial Future Holds

Woolworths doesn’t plan to stop with the Everyday Money Credit Card. The card is just the start of what the company has dubbed a new line of “fresh financial services products.”

While they haven’t committed publicly to specific financial services, speculators have suggested that Woolworths may venture into insurance and other lending options, similar to large retail counterparts in other areas of the world.

The Everyday Money Credit Card

As with most credit and lending options available, the Everyday Money Credit Card from Woolworths has its pros and cons:

Pros: To kick off the card’s launch, the company is offering 0% interest on purchases until 1st February 2009 and no annual fee for the first year. After the initial interest-free period, cardholders have 55 days interest-free on purchases. They’re also giving consumers a choice of four different colours, and easy-to-use online account management tools. Being a rewards card, users earn points when they shop. Every four months, Woolworths issues rewards (if you’ve met the requirements) in the form of a shopping card, allowing the cardholder to spend their rewards however they like at participating stores (such as for grocery or petrol purchases).

Cons: Critics note that, after the introductory periods, the Everyday Money Credit Card carries relatively high fees that negate the rewards to some degree, other than for particularly big spenders. After the first year, the card carries a $49 p.a. fee, and an interest rate of 18.99% p.a. for purchases or 21.99% p.a. for cash advances.

Rewards points are accumulated at rates of one to three points per dollar spent, depending on where purchases are made. Exclusions do apply, such as no rewards points earned for balance transfers and cash advances, and online purchases from Woolworths not being eligible for three points per dollar spent as in-store purchases are.

The new card can be used anywhere MasterCard is accepted, and is issued by HSBC Bank Australia Limited.

Is the Everyday Money Credit Card Right for You?

As with any credit card offer, be sure to evaluate the full terms before applying to determine if the benefits to you outweigh the costs. If you’re a regular Woolworths shopper, and you would like to apply for the card to start earning rewards points on your purchases, an online application is available at EverydayMoney.com.au.

Article correct at its author date: September 2008. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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