With Woolworths and Coles supermarkets already fierce competitors in the grocery stakes, the new Woolies card is moving the battleground to credit cards as well.

The Coles Group Source MasterCard, which started about five years ago, offers a broad array of loyalty rewards but the Woolworths Everyday Money card's main rewards focus is grocery, petrol and shopping vouchers.

In terms of credit-card features, say analysts, the cards are similar. The main difference lies in their rewards schemes and how quickly you can accrue points and use them.

"With the Woolworths Everyday Money card, you collect points far more quickly than with the Coles Source MasterCard, although the Coles points are worth more in dollar terms," says Frank Lopez, financial analyst with research house, Cannex.

How they work

The Woolworths Everyday Money card has an annual fee of $49, though it is waived for the first year. The interest rate for purchases is 18.99 per cent and 21.99 per cent for cash advances. There are up to 55 interest-free days. The card has a number of bonus offers: transfers from other credit cards when you apply for this one will be charged a lower interest rate of 5.99 per cent for the first six months and there is no interest on new purchases until February 1 next year.

The Coles Source card has no annual fee. The interest rate is 20.25 per cent and it has up to 62 interest-free days. There is no interest for six months on balances transferred from other cards.

If you pay off your credit card in full each month, the interest rate will be irrelevant to you as you will never incur interest. But if you revolve your balance each month, both these cards are expensive.

"Both cards offer around two months' worth of interest-free days, which effectively means that if the card is always paid off in full within each statement period (which covers the previous month's spend), then no interest will be incurred," Lopez says. "The Coles card charges a slightly higher purchase interest rate, which will affect any consumers revolving debt on the card from one month to the next, but such consumers should be targeting a low-interest card rather than a rewards card in the first place."

Earning points

Unlike the Coles product, the Woolworths card gives you one point for every dollar spent anywhere - you don't have to be buying from within the Woolworths group. You earn two points per dollar spent within the group (including Woolworths, Safeway, Big W, Dick Smith, BWS, Dan Murphy's, Powerhouse, Caltex Woolworths and Tandy) and three points per dollar spent on Woolworths Select items from Woolworths or Safeway (these are its premium home brand).

To earn points on the Coles card you have to belong to the FlyBuys program (which is also used separately with a National Australia Bank credit card). For every $5 spent within the Coles group (including Coles, Target, Kmart, Officeworks, Bi-Lo, Liquorland and Vintage Cellars), you earn four FlyBuys points if you have both the Source and the FlyBuys card. As Lopez points out, that's 0.8 points per dollar but you can only earn 80,000 points a year before earnings are tapered to one point for every $5 spent within the group.

Points exchange

Every four months of using the Woolworths card you will receive a shopping card to spend at any of the group's shops or petrol stations - as long as you've earned enough points. The minimum amount on the shopping card is $20 - earned with 3450 points - and it expires after three months.

On the Coles card, points are transferred to your FlyBuys account once a quarter (as opposed to the NAB card, where the transfer is once a month). The points last for three years. FlyBuys rewards range from flights and vouchers to the usual gamut of small appliances, toys and wine. As an example, you can get a $20 gift card for 2500 points. On top of these, you can get extra petrol discounts; if you spend a minimum of $30 at a Coles group outlet you earn a four cent fuel saver voucher. On top of your Coles docket, that's a total discount of 8 cents a litre on petrol. The maximum number of fuel saver vouchers you can earn in a month is four.

As you can see in the accompanying bar chart, a $2000 monthly spend on the cards reaps more rewards if you're spending it within the group. If half the monthly spend ($1000) on the Woolworths card was at participating retailers, you'd earn rewards worth $17.40, according to Cannex. On the Coles card, though, the equivalent reward would be worth only $6.40.

Although the numbers may not stack up in theory, it's how you use the card that makes it work for you.

Case study

Prices are just right

Christine Price reckons her family saves about $500 a year using the petrol discounts she gets on her Coles Source card. "The extra petrol savings are what we use it for," she says. "On top of the four-cents-a-litre saving with the Coles docket, the card gives us another four off, which is not bad considering the price of petrol these days." Using the card also earns her more FlyBuys points, which Christine has used for treats or accommodation on family holidays with husband Trevor and children Nicholas, 9, and Ashleigh, 7. "We went to the Gold Coast and, using the FlyBuys points, we paid for our family to get into Movie World and Wet'n'Wild, which saved us well over $200," Christine says.