While limits to airport Slow Lounge visits seemed to really hit a nerve following Friday’s column on Moneyweb (FNB’s incredible shrinking Slow Lounge rewards), dig deeper into the new rewards rules and rates and you’ll find yourself equally confounded. FNB’s “update” to its eBucks rewards programme from July 1 goes far beyond cutting the amount of airport lounge visits per month in half.
Very simply, eBucks works as follows: You need to meet basic qualifying criteria, whereafter certain behaviour and products earn you points. These points translate to a reward level. The reward level then equates to discounts across different transactions/services.
Effectively, there are many sticks and a few carrots. Simple? Not quite.
FNB changed the way the points system worked in its overhaul in October last year. The bank switched from using a trailing 12-month period to a month-to-month one. It made it easier to understand and to monitor, but the other (no-doubt engineered) side-effect was the churn rate between reward levels that it forced. Unless you kept your behaviour and spending the same every month, you’d flip between reward levels. In the past eight months, one or two months I’d be at five (noticeably following an overseas trip with purchases on my credit card), other months a three, and most months a four.
Following these changes in October, I argued that it was harder than ever to move up eBucks tiers. On dissecting the manner in which points are earned, it was clear that “quite how you get to level five (over 18 000 points) without using (abusing?) a fair amount of credit is a mystery….” Now, even getting to level four would be a feat.
It’s not all negative. FNB has changed to qualifying criteria so that from July 1, you no longer need to have a minimum monthly deposit into your account. You are now able to “instead maintain the minimum monthly balance relevant to your account type”.1 This is particularly useful for pensioners.
The ‘ways to collect points’ run across four pages in FNB’s Platinum rewards summary for 2015 (versus two pages last year). On the whole, the number of points you’re able to earn for doing various things has dropped significantly. The bank will argue that its introduced new, lower thresholds to enable customers to earn points. But – as you’ll soon see – dropping the number of points per activity (and in many cases, dropping the item altogether) means that, on average, I’d expect FNB customers to be on lower rewards levels than in pervious years.
Let’s imagine the same, average Platinum account holder that we used in November, and attempt to figure out their reward potential:
- Be registered for inContact, update your contact details at least once in a 12-month period via Online Banking, allow FNB to communicate with you by giving them consent to market to you and choose to receive all your statements via email only – 1 000 points
(Last year, this was split into 500 points for e-mail statements and 500 points for the rest)
- They’ve had an active account for a while (more than three years) – 500 points
(Last year, having an active account for >3 years earned 1 000 points, and for >18 months, 500 points)
- They haven’t done a branch transaction in the past months – 1 000 points
(Last year, you could earn 500 points for not walking into a branch in the past month, 1 000 points for not doing so in the past three and 1500 for the past six)
- At least three debit orders go off their account monthly – 500 points
(Last year, you could earn 500 points for at least one debit order, and 1 000 points for six or more)
- They keep a balance of over R15 000 in their cheque account – 1000 points
(Last year, you’d earn 1000 points. This year and last year, you’d earn 2000 points for having a balance of over R50000. This year, there’s a new reward of 500 points for a balance of between R10000 and R14999)
- There’s a home loan with an outstanding balance of at least R100000, that’s been in good standing for at least 12 months and has home owners comprehensive insurance cover – 1 000 points + 500 points + 500 points
(Last year, having a home loan with an outstanding balance of more than R250 000 earned you 3000 points)
- They bought their iPad via FNB’s smart device deals – 0 points
(Last year, they would’ve earned 1 500 points)
- They swipe their credit card for between R10 000 and R24 999 per month – 1 500 points
(Last year, they would’ve earned 1000 points swiping between R2000 and R4999, 1500 points for between R5000 and R9999, 2000 points for between R10000 and R19999, and 2500 points for over R20000. This year, you’ll earn 1000 points for between R3000 and R9999, 2000 points for between R25000 and R49999 and 3000 points for over R50000 (which is rather absurd!).)
- Half of their total monthly spend is on their credit card – 1 000 points
(Last year, they’d have been rewarded with 3000 points for using between 10 and 90% of the total credit card facilities (straight and budget) available to them. This year, it’s all related to the portion of your monthly spend that’s on your credit card. Manage 100% (!) and you’ll net 4000 points.)
- They’re good with credit and haven’t exceeded their card limit or gone into arrears for the past 18 to 36 months – 1 000 points
(Last year, they’d have earned 1500 points for not exceeding their limit for the last 18 months.)
- Their card swipes exceed their ATM or FNB branch withdrawals – 1 000 points
(Last year, they’d have earned 1000 points for having their card swipes exceed their ATM or branch withdrawals by a factor of 9)
It’s not looking good, with only 10 500 points (reward level two). But – no matter, the bank will tell you – there are new ways to earn points for being a good customer!
- Our account holder pays FNB R199 per month for the privilege (ie. they’re on the Platinum bundled pricing option for cheque and credit card ) – 1 000 points
- They do all of the payments and transfers on either online banking or in the app, and don’t set foot in a branch – 1 000 points
- They do at least one transaction a month using the mobile app – 1 000 points
- They have an active Wesbank vehicle finance loan in good standing, they’ve updated contact details at least once in the past 12 months and they’ve given Wesbank marketing consent – 1 000 points
With these new ways to earn points, they’ll get to 14 500 points, if they’re lucky. Refuse to give Wesbank marketing consent (read: Cash Power personal loans SMS spam) or need a printed bank statement, and you quickly slip down a couple of thousand points.
Remember that this same customer, with the same habits, earned 17 500 points last year when we ran this exercise.
I struggle to get to beyond 14000 points, even with some enforced changes in behaviour. And, as I’m about to settle my vehicle finance loan early, that’s going to knock me down to 12000 points. I’d like eBucks to demonstrate how an average Platinum customer has any hope of reaching level four, never mind level five.
Want to be rewarded for saving? Have FNB “Investment account” and you can earn either 1 000, 1 500 or 2 000 points, depending on the balance. The only problem is that an “Investment account” according to FNB equates to a fixed/notice deposit, money market or call account. Here, a R50 000 deposit will net you a whopping 1.5% to 6.49% interest per annum, depending on the account (money market and fixed deposit for 12 months, respectively).
Or, you can have an FNB Channel Islands Current Account and maintain a minimum monthly balance of £5 000 and earn 4 000 points (and no, you won’t earn a penny in interest). Better yet, you could give an FNB advisor R1 million to invest in one of group asset manager Ashburton’s single manager products and net 2 000 points.
As with the changes in October, the more debt you take on, the better. And you’re no longer ‘rewarded’ as highly for taking on good debt (a home loan). You can earn as many points (2 000) for having each of a personal loan of over 5 000, an overdraft facility of over R10 000, a temporary loan that’s settled or a revolving loan of at least R10 000. That’s 8 000 points on the table there, as long as you load up the debt.
Already, the new rules reward you highly for credit card use. Any surprises given that the merchant fees on those cards are higher than on debit cards. The money to fund these ‘rewards’ programmes has to come from somewhere…. And it’s no surprise that such aggressive reductions to rewards benefits have come after the dramatic cuts in interchange fees earlier this year (dissected in what I argued at the time was ‘The biggest banking story of the year’). A few smart followers on Twitter reminded me of the link.
FirstRand hasn’t disclosed the impact on FNB (we may yet see a number in its results presentation on September 10). Nedbank’s quantified it at R270 million, while Capitec sees it at R300 million (the detail: Why did only two banks disclose a hit in the hundreds of millions?). FNB has a far larger retail, card and merchant business than Nedbank. And it, together with Capitec, issued hybrid cards (debit cards with effectively close to credit interchange rates) “extensively” in recent years. So the impact on FNB can surely not be lower than R300 million? There’s an argument that it will be closer to the R500 million mark.
Where and how do you think it’s busy plugging that rather larger hole?
* Hilton Tarrant works at immedia. He can be contacted at firstname.lastname@example.org.
* He owns shares in FirstRand, first purchased in July 2011.
1 While the minimum balance amounts are the same (R50000), the qualifying criteria for eBucks is a different requirement to the Platinum account fee waiver requirement (for new customers). Legacy account holders on the now deprecated ‘Fee Saver’ account option need to now have a minimum balance of R15000 (from R9000) for the waiver of their Platinum account fees.