Are frequent flyer credit cards worth it? Find out whether the frequent flyer credit card is best for you

Information verified correct on September 27th, 2016

How to find the best frequent flyer credit card for you

Australians love travelling and freebies, so it’s no wonder why the banks and airlines are cashing in off their frequent flyer members. However, unless you’re a big spender, frequent flyer credit cards may not be as rewarding as you think. Some frequent flyer credit cards cost hundreds of dollars a year to own, and if you’re not getting the most out of your rewards, the costs can outweigh the benefits.

For many frequent flyer credit cards, spending less than $20,000 a year on the card means you’ll end up in the red. The higher the card’s annual fee, the more you have to spend to ‘break even’, otherwise you’re just handing over money to your bank.

HSBC Platinum Qantas Credit Card

HSBC Platinum Qantas Credit Card

Receive 60,000 bonus Qantas Points on their Frequent Flyer program plus a complimentary travel insurance.

  • $199 p.a. annual fee
  • 19.99% p.a. on purchases
  • Cash Advance Rate of 21.99% p.a.
  • Up to 55 days interest free
  • Minimum Income Requirement of $40,000 p.a.

Compare frequent flyer credit cards.

Rates last updated September 27th, 2016
Bonus Points Rewards Points per $ spent (VISA/MC) Rewards Points per $ spent (AMEX) Annual fee
ANZ Frequent Flyer Platinum
ANZ Frequent Flyer Platinum
50,000 bonus points 0.5 1.5 $295 p.a. Go to site More info
Citi Qantas Signature Credit Card
Citi Qantas Signature Credit Card
70,000 bonus points 1 0 $99 p.a. annual fee for the first year ($395 p.a. thereafter) Go to site More info
HSBC Platinum Qantas Credit Card
HSBC Platinum Qantas Credit Card
60,000 bonus points 1 0 $199 p.a. Go to site More info
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0.66 0 $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
American Express Essential Credit Card
American Express Essential Credit Card
1 $0 p.a. Go to site More info
Citi Qantas Prestige Credit Card
Citi Qantas Prestige Credit Card
70,000 bonus points 1 $350 p.a. annual fee for the first year ($700 p.a. thereafter) Go to site More info
Virgin Australia Velocity Flyer Card - 0% Interest Offer
Virgin Australia Velocity Flyer Card - 0% Interest Offer
0.66 0 $129 p.a. Go to site More info
American Express Platinum Edge Credit Card
American Express Platinum Edge Credit Card
10,000 bonus points 0 1 $195 p.a. Go to site More info
American Express Explorer Credit Card
American Express Explorer Credit Card
100,000 bonus points 2 $395 p.a. Go to site More info
American Express Velocity Platinum Card
American Express Velocity Platinum Card
50,000 bonus points 0 1 $349 p.a. Go to site More info
American Express Velocity Escape Card
American Express Velocity Escape Card
7,500 bonus points 0 1 $0 p.a. Go to site More info
ANZ Frequent Flyer
ANZ Frequent Flyer
25,000 bonus points 0.5 1 $95 p.a. Go to site More info
NAB Qantas Rewards Premium Card
NAB Qantas Rewards Premium Card
20,000 bonus points 0.5 1.5 $250 p.a. Go to site More info
Virgin Australia Velocity High Flyer Card - 30k Bonus Points offer
Virgin Australia Velocity High Flyer Card - 30k Bonus Points offer
30,000 bonus points 1 0 $144 p.a. annual fee for the first year ($289 p.a. thereafter) Go to site More info
American Express Qantas Premium Card
American Express Qantas Premium Card
30,000 bonus points 0 1 $249 p.a. Go to site More info
ANZ Rewards Travel Adventures card
ANZ Rewards Travel Adventures card
1 2 $225 p.a. Go to site More info
ANZ Frequent Flyer Black
ANZ Frequent Flyer Black
75,000 bonus points 0.75 1.5 $425 p.a. Go to site More info
American Express Qantas Ultimate Card
American Express Qantas Ultimate Card
50,000 bonus points 0 1 $450 p.a. Go to site More info
American Express Qantas Discovery Card
American Express Qantas Discovery Card
7,500 bonus points 0 1 $0 p.a. Go to site More info
Citi Rewards Credit Card - Signature
Citi Rewards Credit Card - Signature
75,000 bonus points 1.5 0 $199 p.a. annual fee for the first year ($395 p.a. thereafter) Go to site More info
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How to calculate the required spend to ‘break even’ with a frequent flyer credit card

The Break-Even formula

What does it mean to break even?

When we say break even, we’re referring to the amount you need to spend on the card to get the cost of the product’s annual fee bank rewards. This is usually calculated using the value of a $100 gift card or popular flight route (i.e. SYD-MEL).

Want to know how much you have to spend on the card to ‘break even’ while comparing frequent flyer product? Here’s how we figure it out:

For Qantas and Velocity frequent flyer credit cards, we’ve based the dollar value of a reward on a $100 Myer Gift Card: 15,100 Qantas Points and 18,000 Velocity Points respectively.

  • Step 1: Find out how many points you need to get $100 worth of rewards value. You need to redeem 15,100 Qantas Points to get a $100 Myer Gift Card.
  • Step 2: Divide the frequent flyer credit card’s annual fee by the dollar value of the reward ($100).
  • Step 3: Multiply this figure by the number of frequent flyer points needed to get $100 worth of dollar value.
  • Step 4: Now take this figure and divide it by the product’s earn rate. If you have a companion account (most premium accounts come with both an American Express and a Visa or MasterCard), you’ll need to estimate how much you will be spending on each card (American Express credit cards have a higher earn rate than Visa or MasterCard credit cards).

This gives you the annual spend required to earn the product’s annual fee in frequent flyer rewards. You can then divide this number by 12 to get to how much you need to spend on the card each month. If your monthly spend is less than this figure, a frequent flyer credit card may not be worth your time and it’s probably a good idea to consider another type of credit card.

This formula can be used to calculate the break even spend for rewards credit cards as well as frequent flyer products. All you need is the number of points needed to redeem a reward, the card’s earn rate and annual fee.

Using this formula, let’s have a look at the break even spend on a couple of different types of frequent flyer credit cards:

Assumptions:

The rates and fees on this page are correct at the time of writing: 22/06/15.

All spending is on the Visa or MasterCard credit cards. American Express credit cards may not be accepted by every merchant.

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What is the difference between direct or indirect earn?

Direct earn frequent flyer credit cards

You have two ways of earning frequent flyer points on a credit card. The first is with a direct earn frequent flyer product. This type of credit card generally has the airline in the name, such as the HSBC Platinum Qantas Credit Card, for instance, and any spending on the card will automatically earn points on your frequent flyer account.

The second way of earning frequent flyer points with a credit card is through a non-direct earn product. This type of card earns you points with the card provider’s rewards program, think Altitude Rewards or Commonwealth Bank Awards Points for example. Rewards points are converted to frequent flyer points at the cardholder’s discretion. Non-direct earn products can leave you worse off if you convert your rewards points to frequent flyer points due to the conversion rate between rewards and frequent flyer programs. Furthermore, some providers won’t allow you to convert your rewards points to frequent flyer points with certain airlines.

What should I consider when comparing no annual fee frequent flyer credit cards?

No annual fee frequent flyer credit card

Rates last updated September 27th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
14.99% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
American Express Velocity Escape Card
Enjoy 7,500 bonus Velocity Points when you meet the minimum spend requirement and earn up to 2 points for every $1 you spend, together with a $0 annual fee.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
American Express Qantas Discovery Card
Enjoy up to 7,500 bonus Qantas Frequent Flyer Points and 1 point per $1 spent, plus 0% p.a. on balance transfers for 12 months, all for a $0 annual fee.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
Commonwealth Bank Business Platinum Awards credit card
Earn up to 3 Awards points per dollar spent, enjoy complimentary insurances and $0 annual fee for the first year.
20.74% p.a. $0 p.a. annual fee for the first year ($300 p.a. thereafter) Go to site More info
  • Pros:

  • These frequent flyer credit cards don’t charge an annual fee and, therefore, cost nothing to own. There’s no spend required to ‘break even’. Take advantage of interest-free offers to get the maximum value from a no annual fee frequent flyer credit card
  • These cards give you return value from the first eligible purchase you make on the account.
  • Cons:

  • Although no annual fee frequent flyer credit cards give you value from the first dollar you spend, you’ll miss out on value adding features like travel insurance or concierge services
  • American Express offer the majority of no annual fee frequent flyer products. Keep in mind that there may be some places where you’re unable to use these cards as American Express cards aren’t accepted by some Australian merchants.
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What can I expect with most frequent flyer credit cards?

Standard frequent flyer credit cards

Hallmarks of a standard frequent flyer credit card can include: an annual fee, an earn rate of approximately 1:1 and companion accounts — you get an American Express and a MasterCard or a Visa Card (depending on the provider) to use in all situations. Both cards earn points, but the American Express will get you more.

  • Pros:

  • Access to frequent flyer benefits without breaking the bank
  • Earn points on everyday purchases as well as travel costs, so infrequent flyers even have the chance to make the most out of a frequent flyer credit card.
  • Cons:

  • Most standard frequent flyer products come with an annual fee which is comparable to a platinum frequent flyer credit card. When we had a look at the difference between the ANZ frequent flyer credit card and the HSBC Platinum Qantas Credit Card, even though the HSBC Platinum has an annual fee of approximately $100 more, you only had to spend slightly more on the platinum account to ‘break even’.
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What are the perks of going platinum?

The next ‘tier’ of frequent flyer credit card are platinum accounts. Platinum frequent flyer credit cards offer more than ‘no annual fee frequent flyer credit cards’, there’s usually an insurance package and a higher earn rate. However, the extra benefits come at the price of an annual fee.

ANZ Frequent Flyer Platinum

ANZ Frequent Flyer Platinum Credit Card

  • $295 p.a. annual fee
  • 19.99% p.a. on purchases
  • Cash Advance Rate of 21.49% p.a.
  • Up to 55 days interest free
  • Minimum Income Requirement of $35,000 p.a.

Platinum frequent flyer credit card comparison

Rates last updated September 27th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
ANZ Frequent Flyer Platinum
Get 50,000 bonus Qantas Points after first eligible purchase is made within three months. Earn up to 1.5 Qantas Points per $1 spent on purchases.
19.99% p.a. $295 p.a. Go to site More info
HSBC Platinum Qantas Credit Card
Receive 60,000 bonus Qantas Points on eligible spend within 3 months. Enjoy access to premium benefits and complimentary insurance.
19.99% p.a. $199 p.a. Go to site More info
St.George Amplify Platinum
This card features a balance transfer rate of 12% p.a. for 18 months, 1% p.a. for 12 months on purchases and an annual fee waiver for the first year.
1% p.a. for 12 months (reverts to 19.49% p.a.) 0% p.a. for 18 months $0 p.a. annual fee for the first year ($99 p.a. thereafter) Go to site More info
Virgin Australia Velocity High Flyer Card - 30k Bonus Points offer
Receive 30,000 bonus Velocity Points and earn 1 Velocity Points per $1 spent. Receive an exclusive $129 Virgin Australia Gift Voucher and two complimentary Single Entry Virgin Australia domestic Lounge passes each year.
20.74% p.a. 0% p.a. for 6 months $144 p.a. annual fee for the first year ($289 p.a. thereafter) Go to site More info
    • Pros:

    • Platinum credit cards offer cardholders a number of benefits like complimentary lounge access, travel and purchase protection insurance
    • Platinum frequent flyer credit cards often come with a higher earn rate, allowing you to get more for your dollar.
  • Cons:

  • Some of the features included with platinum frequent flyer accounts can go to waste. If you pay for the benefits that come with these accounts, make sure you use them
  • The benefits usually come at a cost, whether it be higher interest rates or an annual fee.
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How can big spenders benefit from black frequent flyer credit cards?

Black frequent flyer credit cards

A relatively new product offering, black credit cards represent the highest tier or frequent flyer product. Cardholders benefits from the highest possible earn rates with the promise of the largest range of rewards on offer. Remember, these features come at a price. Black credit cards are for big spenders and high-income earners, which is reflected in the product’s minimum income requirements.

Black frequent flyer credit card comparison

Rates last updated September 27th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
ANZ Frequent Flyer Black
Earn up to 75,000 bonus Qantas Points after you make your first eligible purchase within 3 months of card approval plus earn 1.5 points per $1 spent. Easier payments with Apple Pay.
19.99% p.a. $425 p.a. Go to site More info
ANZ Rewards Black Credit Card
Earn 75,000 Reward Points after your first eligible purchase within the first three months. Up to 3 reward points per dollar spent and unlimited access to airport lounges with complimentary travel insurance.
18.79% p.a. $375 p.a. Go to site More info
ANZ Business Black
Receive 50,000 bonus points when you spend $10,000 within the first 3 months and get access to a range of premium rewards and travel benefits.
18.99% p.a. $450 p.a. Go to site More info
Citi Prestige Card
Receive 70,000 bonus reward points on your first spend with uncapped rewards points and no points expiry.
20.99% p.a. 0% p.a. for 6 months $700 p.a. Go to site More info
  • Pros:

  • Black credit cards offer the full package of travel-centric credit card benefits, making them handy travel comparisons while venturing overseas
  • Black frequent flyer credit cardholders have access to everyday extras such as concierge services, complimentary lounge access and complimentary insurance.
  • Cons:

  • Although the benefits offered with black credit cards may be enticing, these accounts are not for everyone. The annual fee and minimum income requirement make these products inaccessible to people on a low or average income
  • Like platinum frequent flyer credit cards, if you don’t make use of all of the extra features and services on offer, you will be wasting money in the long run.
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Considerations when choosing a frequent flyer credit card

Looking at the earn rate and the annual fee is a simple way of determining whether a product is going to be worth your while; however, this calculation doesn’t look at the entire picture. The following points should also be considered in your comparison of frequent flyer credit cards.

  • Are there any sign up bonuses? Some accounts will give you a number of frequent flyer points when you first apply for the card or when you spend a certain amount after you apply. Bonus frequent flyer points go some way towards minimising the break even spend on the product in the first year. If you plan on keeping the credit card for longer than one year, be careful, in the second year you have the account, you’ll need to spend more on the card to make up the value of the bonus points.
  • Insurances and perks. Frequent flyer credit cards are aimed at people who like to fly. And insurance is pretty much a necessity for anyone who wants to head to foreign shores. Complimentary international travel insurance, which comes as a perk with most premium frequent flyer credit cards represents a saving of a few hundred dollars. Also consider extra cardholder benefits like airport lounge access. Anyone who has had a 10 hour stopover in a foreign airport will appreciate this perk.
  • Increased earn rate. You should also consider that once you have reached the break even spend on your credit card, cardholders who have gone for a black or platinum credit card will rack up points quicker due to their card’s increased earn rate.
  • Redemption options. Another point to consider is the frequent flyer program’s redemption options. Using your points for a flight means you have to play by the airline’s rules, which can change at any time, and with little prior warning from the carrier. Qantas changed the way Qantas Frequent Flyer members could redeem their points for flights not too long ago, which saw the value of a Qantas Point drop in value.

There’s a lot to think about when you’re comparing frequent flyer credit cards and it’s all important. In the end, it’s your money, right? Why bother with a frequent flyer product that’s going to drain your bank balance? Compare your options and find a frequent flyer credit card that’s going to help you take to the skies sooner.

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FAQs

What if I'm an infrequent flyer?

If you don’t travel regularly, you’ll want to consider a credit card that allows you to earn points for regular purchases as well as on flights.  If you’re an infrequent flyer, compare the programs and choose one that lets you earn and redeem miles or points for non-flight activities, such as shopping at the supermarket. Then consider your shopping patterns and look for non-flight rewards like vouchers, discounted goods and services that better suit your needs.

How do I know which frequent flyer credit card is best for me?

There is no one best frequent flyer program or credit card. Consider your own financial situation in conjunction with the features and costs of the card to determine whether the benefits outweigh the cost. Although the ‘break even’ calculation is a good place to start, your comparison should consider all of the features offered by the credit card and frequent flyer program.

Can I use my frequent flyer credit card and points with another airline?

Generally, you will only be able to earn and use points with the frequent flyer provider partnered with your credit card. However, although you can’t always directly convert your points, many airlines belong to alliances that will allow you to use your points for flights with another airline. However, there are some limitations and restrictions that come with redeeming your points with affiliate airlines, so make sure to read the terms and conditions before doing so.

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Credit Cards Comparison

Rates last updated September 27th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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