Woolworths credit card: "Fresh food people" freshen finance

Given Woolworths’ involvement in many areas of the retail industry, it may come as no surprise that the food giant is diversifying into financial products. Following suit from large supermarket chains in the UK and the US, which offer consumers the chance to buy insurance plans alongside their veggies, Woolworths has issued the Everyday Money credit card. So is it just a gimmick and will Woolworths’ inexperience in the finance sector backfire, or are they offering a genuinely competitive product and giving the competition some serious food for thought? Money Buddy investigates.

Supermarket finance: The Woolworths Everyday Money credit card

The main pull of the Woolworths Everyday Money credit card is clearly the interest-free purchase rate and waiving of an annual fee (for the first year). However there are other benefits in terms of earning shopping points, which ties it in with the supermarket or chain store shopping card experience.

So what’s the upshot -what is Woolworths offering with the Everyday Money Credit card? In a nutshell:

  • $0 annual fee for the first year (note: it switches to $49 p.a. thereafter)
  • Up to three points per $1 spent on Woolworths ‘Select’ products

You can also earn two points for every dollar spent on other products at not only Woolworths or Safeway supermarkets but also at Big W, Caltex Woolworths and Safeway branded outlets, Woolworths and Safeway liquor stores, Tandy, Dick Smith Powerhouse and some Dick Smith Electronics stores. Furthermore, you earn a point for each dollar you spend on all other purchases.

Woolworths also offers the opportunity to receive a shopping card, which is basically a reward every four months to spend at Woolworths or participating stores – if you‘ve spent enough to earn it.

Shrewd shopping: Checkout the small print

No financial product is perfect of course (and some are a lot less perfect than others), so what’s the downside? Well, firstly, earning points excludes online purchases. Secondly, the card has a very high purchase rate once the interest-free period ends. It’s worth noting that there is a host of limitations with how and where earned points can be spent also.

You may be wondering how a supermarket comes to offer financial products. How exactly does it work? HSBC is the credit card issuer and Woolworths has essentially applied its own branding to capitalise on consumers’ trust of that brand. What this means is that HSBC’s lending criteria applies to the Woolworths Everyday Money credit card just as it would to any HSBC credit card product.

So what next? The Woolworths home loan? Woolworths car insurance? Most believe that the Woolworths Everyday Money credit card is just the tip of the iceberg. Given Woolworths’ powerful Australian market position, and the competitive nature of the current finance product market, you wouldn’t bet against the “fresh food people” spreading their wings further.

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