Banks' rewards programmes: Are you jumping through hoops?

Many banks are now offering rewards to their clients to incentivise them, except they’re not rewarding them for saving money but rather for spending. Does this mean that banks are discouraging people from saving their money?

John Maytham speaks to financial journalist Maya Fisher-French to make some sense of it.

"First of all, banks make their money out of transaction fees. So that's when you're spending on your cards, they get a merchant fee which is why they do reward programmes that incentivise you to spend."

Fisher-French added that it's important to remember what reward programmes are. "They are there to reward you for behaviour that the bank would like you to do. Not necessarily reward you for behaviour that's good for you. "

"So, I think you need to take a step back to say... does it align with my behaviour and if it does, and I get cheap flights or whatever, then that's great but we mustn't be led by the nose."

I'm not jumping through hoops and doing flick-flacks, she said.

Fisher-French gets particularly concerned where rewards are linked to products. "So where you are taking out a product to get discounts you've got to make sure that the product you are taking out is the right product for you and that it's priced correctly. You're not just taking it out for rewards. Because banks also change the goal posts. We see this every year and oh my gosh do I get complaints when reward programmes are changed."

To listen to the full discussion, click the media player above.