NAB's Credit Card Flights of Fancy

Spend, spend, spend. That's the message the banks like to spread, especially when it comes to credit cards. The more credit card debt there is in Australia, the more money banks are able to make in the form of fees and interest charges.

You probably already receive your bank's regular promotional flyers, pushing this card or that product or advising you that your credit card limit has been increased. Another tactic banks use to promote spending is through the promotion of credit card reward schemes, such as NAB's Velocity Program.

Customers with the Velocity NAB Gold American Express Card and Velocity NAB Visa Card are able to earn Velocity Reward points. For as long as card holders keep their Velocity Rewards account active which basically means as long as they continue to spend with their card regularly there is no limit to their point-earning capacity. NAB also promote that their Velocity points have no expiry date.

The Velocity NAB Gold American Express Card holders earn one point for every dollar they spend, while the Velocity NAB Visa Card holders must spend two dollars to earn one point.

NAB's Velocity Rewards Points are redeemable for a range of products including seats with Virgin Blue, Pacific Blue or Polynesian Blue airlines. Information on how to earn points is widely available on the NAB website, but specific information on redeeming points is harder to find. And it's not surprising.

Among many point-redemption options, NAB will allow you to redeem a one-way flight from Melbourne to Hobart for between 6,400 and 38,800 points. With a Velocity NAB Visa Card which earns one point for every $2 you spend, this means the card holder would effectively have to spend a minimum of $12,800. That's just the minimum spend amount for a one-way flight that is worth at the very most a few hundred dollars.

It's easy to see how rewards schemes such as the NAB Velocity Program work in the bank's favour. Customers are encourage to spend, spend and spend some more for the sake of redeeming products worth far less than the money they have to spend to earn the points in the first place. On top of this, the Velocity NAB Gold American Express Card has a minimum credit limit of $5,000 and the Velocity NAB Visa Card has a $500 minimum credit requirement.

A cheaper and financially-safer alternative to credit cards, and their reward schemes, is a debit card. The Visa and MasterCard debit products now available mean you can still have the flexibility to use your card in the same situations as you would use your credit card. You access your own money, which means no bills, no interest charges and no $12,800 one-way Melbourne to Hobart airfares.

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