Reward Program Credit Cards

Reward credit cards allow you to earn points while you spend, with benefits such as free flights, gifts, cashback and other rewards – just by using your credit card!

The goal with any rewards credit card is to maximise the value from the points earned on purchases relative to the annual fee of the credit card.

Reward Program Credit Card Comparison Table

Best Reward Credit Cards ($12,000 Yearly Spend)*

$12,000 is generally a very low amount to spend per year for a rewards credit card, thus there are limited choices which will actually benefit you and reward you as a consumer.

The following table includes credit cards have been rated best* for consumers who spend an average of $12,000 on their card per annum. The ratings assume that no interest or fees are charged throughout the year. The ratings are assigned by Cannex, Australia’s largest specialist financial research institution.

Best Reward Credit Cards ($24,000 Yearly Spend)*

$24,000 is a solid annual spend as far as reward programs for credit cards go. $24,000 is the commonly perceived minimum necessary to benefit from Frequent Flyer credit cards. These credit cards offer travel and purchase security benefits, which you’ll need to take into consideration whether you need or not.
If you don’t, you can still benefit from a different rewards card level of spend.

You’ll need to be earning at least $45,000 a year on average in order to be considered for approval on these cards.

The following table includes credit cards have been rated best* for consumers who spend an average of $24,000 on their card per annum. The ratings assume that no interest or fees are charged throughout the year. The ratings are assigned by Cannex, Australia’s largest specialist financial research institution.

Best Reward Credit Cards ($60,000 Yearly Spend)*

$60,000 is a high annual spend, and yields the potential to earn over $500 of rewards a year. $60,000 is necessary to spend on these cards as their annual fee is so high – but after you breach the annual fee offset, you can access a world of luxury and rewards. These credit cards offer travel, 24/7 specialist services, purchase security benefits and a wide range of prestige benefits which you’ll need to take into consideration whether you need or not.
If you don’t, you can still benefit from a different rewards card level of spend.

You’ll need to be earning at least $70,000 a year on average in order to be considered for approval on these cards.

The following table includes credit cards have been rated best* for consumers who spend an average of $60,000 on their card per annum. The ratings assume that no interest or fees are charged throughout the year. The ratings are assigned by Cannex, Australia’s largest specialist financial research institution.

Who Benefits Most From Credit Card Travel Rewards Points?

The people who benefit most from travel rewards are those who already travel a great bit. This is not the program you want to sign up for if you don’t travel much but want to save up miles or points to count towards your dream vacation to Rome or somewhere equally fascinating. It’s time to explore a little and find out which credit card comparison reward is best suited for your spending needs and reward wishes.

That doesn’t mean you won’t be able to travel it will simply take longer. These cards usually apply a greater number of points from your charged travel expenses towards the total number of points and a standard but much lower points value to general purchases charged on your card.

There are generally three types of people who do surprisingly well with these types of cards.

1. People who travel frequently for business. Business travellers are often able to stack up a large number of credit card points on hotel stays or air fare. If you have a credit card that rewards both handsomely, that’s great news. Otherwise choose the card that is most likely to bring you bigger rewards and bonuses.
2. People who travel for pleasure. Hobby travellers may not bring in the impressive totals that business travellers do as far as reward points are concerned but they do add up over time when used wisely.
3. People who spend. If you spend enough money each month you won’t need the added benefit of bonus points for travel rewards. Pick a card that will provide the greatest number of rewards for the way you spend then spend and repay your credit card debt wisely to make sure your racked up points serve you and not the credit card company in the end.

Who Doesn’t Benefit As Well from Travel Rewards?

There are also people who do not benefit as much from credit card travel rewards as others. When you do your credit card comparison reward program alternatives to travel rewards should be explored to determine which are really best for you if you are one of these types of credit card spenders.

1. People who stay at home. There’s nothing wrong with staying close to home and hearth at all. If you don’t travel a great deal there are cash back and other credit card rewards programs that are likely to serve you better or offer free gifts and goodies for things that are better suited to your particular lifestyle.
2. People who rarely use their credit cards. Not everyone relies on credit cards for day to day spending. Some people do actually reserve their credit cards for emergencies or specific expenses that are paid off monthly. Rewards may be nice but better terms, lower interest rates, or cash back on credit card purchases may be a better reward for your loyalty to your credit card company than travel rewards.
3. People who have poor credit. It happens. But if you’re attempting to rebuild your credit you’d be better served with a card that doesn’t offer the temptation of a travel rewards cards. These cards often have higher standards for credit scoring and could serve to harm your credit further by rejecting your application.

Key questions with credit card rewards programs

• Does the rewards program suit my card spending habits?
• Does the rewards program offer rewards I want to receive?
• Am I charged for being a member of the rewards program?
• How many points per dollar are earned, and what is the actual worth of these points when redeemed?
• Are bonus points available and with which bonus partners?
• Will the rewards points expire?
• Is there a cap on how many points can be earned in a year?
• Is it easy to find out what rewards are available?
• Is it easy to redeem points for rewards?

How Do Rewards Credit Cards Work?

Points Value

Keep in mind that the points per dollar ratio is not the real issue. The most important consideration is how your points then translate back into dollar value. This is a matter of working out how many points you need to earn to redeem for the value of $1. If you need 7,000 points to get a $50 gift card, then you need 140 points for each $1. Until you know what this conversion rate is, you won’t really know the true value of your credit card rewards program.

Reward credit cards allow you to earn something back from your spending. The points you accumulate when you spend on a rewards credit card can be redeemed in various ways, including cashback, frequent flyer miles, and discounts on goods or services.

Let’s take a look at these different option in a bit more detail.

Points Redemption Options

Cashback – This means what it says. You get a certain amount of cash back for your spending. There are two ways in which cashback works: some credit cards offer a percentage of your total spend back, which is usually 1%. This type of scheme usually operates outside a rewards scheme; other rewards credit cards offer cashback within a rewards scheme, whereby you redeem your accumulated points for cash, although this option may take more points than the equivalent value in, say, shopping vouchers. Cashback is either paid back onto your card or as a cheque, monthly or yearly, depending on how your provider operates. Review cashback credit cards

Air miles and travel rewards – Air miles have become very popular in recent years, and are now only rivaled by the above cashback option. Clearly, they suit those people who travel frequently and are looking for free or cheaper flights. Some rewards credit cards are dedicated frequent flyer cards, meaning the rewards scheme is geared towards this end. Each card will have affiliated airlines, so it is best to check which service suits your needs. You may also be able to take advantage of VIP airport lounge access and priority check-ins. Travel rewards can be redeemed with affiliated travel operators, and are more wide-ranging than just flights.

Merchandise – There are two ways in which a rewards credit card can work with retail goods. You can earn points for shopping at certain retail locations (possibly earning more points) or whenever you make any purchase (possibly less points); or you can have discounts applied at the time of purchase simply because you are making payment with a specific card. Some providers

Charities – Charity credit cards are rewards credit cards tied to a certain charity. These work in a similar way to cashback cards in that they will earn your chosen charity a percentage of your total spend. The charities are affiliated with particular providers, so your choice of credit card might be dictated by any preference you may have for a worthy cause. Charity credit cards sometimes involve an annual donation as well.

Generally speaking, one dollar will equal one point, but that is not what’s important. When you compare rewards credit cards, you need to go beyond this and ask what value your points will have. Ultimately, your rewards points are effectively translated back into a dollar value. One provider may have the following calculation: one dollar = one point = 5cts; another may dictate that one dollar = one point = 50 cts; yet another may say that one dollar = two points = 75cts. You will need to dig deep to uncover the truth, but if you don’t do this then your attempts to compare rewards credit cards will not be based on fact. If cashback is your goal, then you need to know whether you will have to exchange more points for cashback than for a shopping voucher of the same value.

How to tread carefully with rewards credit cards

Unfortunately, you do need to be wary with rewards credit cards. Although some people may think they are getting something for nothing, that sort of thinking can be naive. Apart from the above-mentioned advice that you shouldn’t spend unnecessarily to earn points, the key issue is whether there is a fee involved for being a part of the scheme. To give you an example, if you were to pay a $100 annual fee (which would be high), you would have to be spending at least $20,000 annually just to get that fee back. In a recent survey across sixty-three rewards credit cards, one website found that unless you’re spending more than $1,000 a month, you are most likely paying more in reward scheme fees over the year than you are receiving back in rewards. The message here is to find a rewards scheme that is free.

Points calculations

In any breakdown of the features of a rewards credit card you will clearly see quoted how many points per dollar you will earn. The usual amount is one point per dollar. However, that equation is fairly meaningless if you don’t know how many points are then required for redemption on the available rewards. Your thousand points earned with one provider may get you a product twice as expensive as with the same amount of points earned elsewhere. Points are currency. You wouldn’t equate rupees with dollars, or yen with sterling. The fickle value of points may be evident within the redemption system of just one provider. You may have to redeem 500 points for a shopping voucher, but 1000 points for cashback to the same value.

This requires investigation on your part, so you know you are receiving your maximum points value.

How to kill the value of your points

Earning points to the value of $5 when you end up paying interest to the value of $15 is just plain silly. Ending up with an unpaid balance one month because you had to make a large purchase is one thing; failing to pay off your debt in full because you’ve been on a points-accumulation spending spree is the worst type of false economy. You must not spend to earn points, and no matter why you are spending, your intention should always be to clear your balance in full every month. The easiest way to make sure your rewards credit card is paid in full each month is to set up a direct debit to pay it off, but this can be fraught with danger if your spending effectively takes you overdrawn on your bank account, so you get hit with bank fees and credit card interest.

Hidden Redemptions

To say that this is the main reason that many cardholders participate in credit card rewards programs, some credit card issuers will make it hard to redeem your points. They are practically hidden. Depending on the company, you may have to look very hard on their websites to find the little menu tab that takes you to redeem your points. Conduct a credit card comparison. Rewards should not be this hard to redeem. Attempt to find a company that makes it easy for you to redeem your points. To take it one step further, there are even companies that will let you set up automated redemption.

Higher Percentage Rages

This is one area that many potential cardholders generally overlook. As a result of the wonderful offers that are on a rewards credit card, they fail to see the higher percentage rate that is associated with the card. Conduct a credit card comparison. Rewards that are obtained at higher interest rates should not be considered a good deal.

Encouraged to Redeem Lower Priced Items

There are a few credit card companies that use subliminal advertising to encourage their credit cardholders to redeem their points for lower priced items such as gift cards or other lower priced items. This is done as opposed to encouraging the redemption of more expensive items such as airline tickets.

Bad Customer Service

Should you forfeit good customer service just to get more bonuses? Many credit card companies will forfeit good customer service when they offer more bonuses and rewards to their customers. It is a way to cut back on expenses; however, you should not be forced to sit through bad automated prompts in order to conduct regular business. Make sure that your new creditor still offers good customer service.

Redemption Point Options

Why accumulate points if you do not have many options for redeeming them? Attempt to use a company that offers redemption in many forms such as cash back, gift cards, airline tickets, hotel stays, etc. Some companies only allow redemption in their own company credits or in format such as miles only or hotel rooms only. You might not want this type of reward. Before you accept the terms of a reward credit card, make sure that you are okay with the options for redeeming your rewards or points.

Forced Creditor’s Network

Credit card rewards programs are based upon the credit cardholder getting an incentive for using the card. However, many times in order to get the points or reward associated with that usage, the cardholder has to stay within the creditor’s network. For example, you might get points for booking your airline tickets via your credit card, but you might have to use a travel agent that is listed within the creditor’s network of business partners. Read the fine print and determine if you can make your own choices or are force to use those of the creditor.

Confusing Rewards Tiers

Sometimes reward credit cards can be quite misleading to the average person. When you read many of the offered bonuses, they will have a bonus of anywhere from 1-5%. However, what the creditor may not tell you is that a certain amount of points must be accumulated in order to reach each new percentage level. For example, you need 1000 points for 1%, 2000 points for 2% etc in order to claim your rewards. As a result, many people might never see that 5% level. Conduct a credit card comparison. Your rewards should always be clearly stated by all companies concerned. You should never have to make assumptions about potential rewards.

Capped Yearly Earnings

Many creditors will limit the number of rewards that you can earn within a year. Although it is recommended that you use credit wisely, a lot of people might opt to purchase more of their everyday purchases with their reward credit card. Every person is different. If you are able to make these purchases and pay off your balance every month, it will be more of a savings to you. When your rewards are capped, it reduces your possible savings. Try to find a rewards credit card that does not limit your yearly rewards.

Late Payments

What happens if you miss a late payment? Are you penalized in any way? Do you automatically lose your accumulated rewards? Do you lose any membership privileges? Even though you don’t ever anticipate getting behind in your bills, it can happen. With some rewards credit cards, you will lose all points and rewards if you miss any or too many payments. Conduct a rewards credit comparison and steer clear of these particular programs.

Other issues to be aware of

No credit card – not just rewards credit cards – should be used for cash withdrawals. These are not only charged at a higher rate of interest, but they are always charged from the moment the cash is in your hand – they do not benefit from the interest-free days facility you may have on purchases. You should equally avoid making a balance transfer to a rewards credit card you regularly use for purchases. Not only does it not count towards your points, but if you have made it because of a low or zero percent offer, then any repayments you make will go to the debt at the lowest rate of interest first, leaving your purchases untouched until it is paid off. It’s something called the “adverse order of payments”.

Make sure your free rewards scheme is not being subsidised by a higher than average annual account maintenance fee.

Check if there is a cap on the amount of points you can earn in a year. This will punish the big spenders whose purchases above a certain level will then not count.

Make sure your points do not expire. This will punish the low spenders who will not have the chance to build up points for a decent reward.

The Different Types of Rewards Credit Cards

Qantas:

Overall, the Westpac Earth Platinum Plus card is your best option as long as you are spending more than two thousand dollars a month (any less than that, and you don’t want to go platinum), or also check out the NAB Qantas Rewards Premium as an alternative. Again, this is because of the rewards points that American Express offers- they transfer really well and retain most (if not all) of their value. If you are looking for a Visa or MasterCard though, try the ANZ Frequent Flyer Visa. This is good enough for most spenders, but the frugal large-spenders will aim for a CBA Platinum Qantas Frequent Flyer MasterCard (the best deal for anybody spending more than five thousand per month).

Velocity:

Velocity rewards points are handled a bit differently, as they require an entirely different set of cards that sometimes have a varied set of rules. American Express again dominates the competition though with their Westpac Cards, though they are called “Westpac Altitude” for Velocity rewards credit cards (they usually come in normal, silver, and platinum programs, depending on how the card holder spends their money). Again, go platinum only if you spend over two thousand dollars per month, as the annual fees will otherwise negate any points you earn. Truly large budgets though deserve the American Express Platinum Ascent, which works slightly differently. Those seeking MasterCards or Visas may want to look into the CBA Platinum Velocity Frequent Flyer MasterCard, or go without the Platinum if they are limited to a one thousand dollar per month budget (though another option would be the ANZ Rewards Visa).

Competition:

Not all the VISA cards used to offer such highly-profitable bargains, at least not until late 2008 where two more competitors joined the field: Woolworths Everyday Money MasterCard and David Jones American Express. Adding into the mix the Myer Visa card only mixes things up even more! With three rewards programs constantly battling for customers, they decided to come up with a new incentive- loyalty points. While the functionality differs slightly, they all work somewhat the same. They can be used in store, and converted into gift cards!

The most profitable dollar-to-point program is available to those who limit their spending from one to two thousand dollars per month, and this is only if you use the Myer Visa- the problem is that outside store points can only be earned up to 2000 per month, which limits higher level spending. From two to five thousand dollars, the best bargain is the David Jones American Express. To further complicate matters though, the Woolworths MasterCard is not the best “bargain” per say, but the vouchers can be used at some Woolworths owned shops and the supermarket as well! This makes their card the most flexible by far.

Of particular importance to note is that American Express Gold Choices and Ascent, and the GE Money Coles MasterCard has no increasing benefits plan for shopping vouchers in the two-five thousand dollar per month spending budget, while the Westpac Altitude (as well as Gold and Platinum) all have increased amounts of payback for those budget allowances (typically in multiples of 4 as each margin of spending increases).

Cash:

There are other ways of claiming rewards points though, not just gift cards or frequent-flyer miles. While some programs offer rewards catalogues, others instead offer enticing programs such as money! Indeed, cash back cards such as ANZ Rewards Platinum , and the Westpac Altitude set, all offer cash deposits for your points- the money is simply credited to your account. This cash can be used for things that other rewards could not, such as repaying your card or shopping in any store of your choice (no need to be limited to certain franchises).

In order for this to be a profitable endeavour though, the average spender would need to make at least two thousand dollars in purchases for each month. This is about eight hundred dollars more than the average Australian. Only after such an amount is made can returns be considered profit, due to the annual fees involved with using a credit card. These fees can be any amount, but range from zero to nine-hundred dollars. Higher level rewards credit cards are available though to those who splurge more often. These cards are more expensive to maintain, but have better rewards programs, such as personalised rewards, concierge service, and possibly even travel insurance at no additional cost.

How To Compare Rewards Credit Cards

When you compare rewards credit cards, you should not be blinded by the idea that they offer something for nothing. You should take every aspect of the credit card into account and make sure you make comparisons with other rewards credit cards to ensure you are getting the benefits you desire.

Reward credit cards are advertised as providing something for nothing; or at least something for doing what you would normally do, which is spend money on your credit card. The points you accumulate when you spend on a rewards credit card can be redeemed in various ways, including cashback, frequent flyer miles, and discounts on goods or services.

However, for the more canny consumer who knows there is rarely such thing as a free lunch, a certain amount of research is required before an application is made. In a recent survey, only 6% of Australians said they bothered to check out a credit card comparison site before making a credit card application. Around 50% only applied to their own bank. The need to compare rewards credit cards is perhaps more important than ever, because if you are not sure of the facts, you may be basing your application on vague or misleading information.

Here are the main point to consider when you compare rewards credit cards:

How can a rewards credit card work against me?

This should be your first question. The credit card provider’s intention is to create a paradise scenario. You’re spending anyway, so why not get something back for your trouble?

Don’t be naive about this. Some rewards schemes charge an annual fee. One financial website recently discovered that taking an average across sixty-three rewards credit cards that charged a fee, unless you’re spending more than $1,000 a month, you will probably be paying more in reward scheme fees over the year than you receive back in rewards. Individual cases may prove this right or wrong, but the consensus on charged-for reward schemes is not good.

How do you earn your points?

Earning points on a rewards credit card is hardly rocket science – you just need to spend on the credit card. More dollars spent means more points earned. However, you should be aware that a balance transfer made to a reward credits card will not count towards your points, and the same goes for any cash withdrawals you make. One easy way to earn more points would be to begin using your credit card for those everyday purchases you would ordinarily use cash or debit cards to cover. If you do this, you must make certain you keep a check on your statement online, or you may get a nasty shock when it arrives at month-end. One thing you should never do is make purchases purely with the intention of earning points. If you end up not being able to pay off your balance at the end of the month, the value of any points earned will be more than wiped out by the interest payments you will be liable for.

If you shop wisely, your rewards credit card can build up points more quickly. This would involve you spending at affiliated retailers or airlines, in which case you may find that you are earning double points on your purchases. Also look out for introductory points offers, where you will earn a bonus number of points for spending within a certain period of time, or with named merchants within a set period. Again, only do this if such a purchase was inevitable anyway, and shifting your allegiance does not have any negative impact that would wipe out the value of any points earned.

This is standard across the industry. Points are earned when you spend on your card. But you must be aware that any balance transfer made to a reward credits card will not count, and the same goes for any cash withdrawals you make. You should never think it a good move to spend purely to earn points. If you end up not being able to pay off your balance at the end of the month, the value of any points earned will be more than wiped out by your interest payments. Earning points to the value of $5 when you end up paying interest to the value of $15 is a false economy. If it happens because you had to make a large and necessary purchase you couldn’t pay off, that cannot be avoided, but getting into debt because you went on a spending spree with the purpose of building up points is frankly stupid.

Credit cards that have rewards programs are on the rise. More and more Australians are using them to purchase everything from gift cards to airline flights.

Did you know that there are ways to increase your earning power on these rewards programs? Here are some ways to make the most out of your rewards card.

Maximise the Benefits of your Rewards Credit Card

Being familiar and understanding where you can accumulate the most rewards points will get you closer to being able to collect credit card rewards.

Everyday Purchases

There is no point in having a credit card with a rewards program if you are not going to use the card. We all have to eat and get around so you can start by using your card for everyday purchases such as groceries and petrol. You are already planning on spending the money so you might as well use your card to make the purchases and accumulate points while you are at it.

Bonus Points

If you look closely at your card, you will probably notice bonus point options. These are points that are added, above and beyond the regular points, for visiting certain bonus partners, using your card during a certain period, etc. Pay attention to these bonus point options because it is yet another way to collect credit card rewards. If you are familiar with your credit card’s bonus partners and already make purchases at these partners, you can make a special point of going there with your card in hand to amass even more points.

Using Your Credit Card Wisely

Now that you have begun to use your card for everyday purchases and have maximised your bonus points, you will need to move forward and make the most sound decisions.

Pay Off Your Balance Each Month

Just because you are using your card to pay for petrol and groceries does not give you free reign to run through the cash that would otherwise be used for those purchases. You should earmark that cash to be used to pay off your balance each month. If you fail to pay off your balance, the result will be paying interest on that remaining balance. If you are cautious, there should be no reason to have to pay interest.

It is also important to know that you will not receive points by doing balance transfers or for cash advances so take this into consideration when using your card to collect credit card rewards.

Cap and expiry:

Find out when you compare rewards credit cards if there is a limit imposed on how many points you can earn in a certain period. If so, and you spend a lot on your card, you will not be able to claim your full entitlement. Also see if your points expire if you keep them for too long. This prevents people who do not spend much from saving up for a decent reward because they are forced to redeem their points before they are ready.

Other considerations when you compare rewards credit cards:

Rewards credit cards are no different to regular credit cards in that you will be hit by interest charges if you do not pay off your balance in full each month. In this respect, you should check that the regular rate of interest is no higher than average. Some rewards schemes that do not charge an annual fee may have hidden that charge within the annual credit card fee, or may have a higher APR to compensate.

Do you benefit from a period of interest-free days? This is pretty standard nowadays, and it would be disappointing to find you lacked this, especially if it has been omitted to balance any benefits you may gain from your rewards scheme. A lack of this feature removes the normal reward for paying off your balance in full every month: no interest charges.

With all the different rewards schemes being offered in Australia, it can get quite confusing trying to compare credit card rewards. For that reason, we are presenting a simplified worksheet you can prepare on your own so that you can see a side-by-side comparison of cards.

How to compare credit card rewards

If you have been looking at different rewards cards you have probably narrowed down your choice to two or three cards. This is a point where most people get stuck because it can get confusing when you start looking carefully at all the card features.

When you are ready to compare credit card rewards, simply take out a piece of paper and a pen and draw a table that includes four columns. The first column will be the biggest, and you’ll need space to write some words. The next three columns can be quite small since you will only be putting in a few numbers or a check mark.

Name the first column “Questions” and the next three columns with the name of the credit card you are comparing.

Under the questions column you will insert the following questions.

• Can you get enough benefits from the points you earn?
• For every dollar you spend how many points will you receive?
• What is the annual fee?
• Are there any excluded stores in the points program?
• Is a reward redemption easy to make?
• How much cash will you get back for using the card?
• Do the points have an expiry date?
• Is the rewards scheme tiered?
• How many points do you need to reach the next level?

You can add any questions to this list that you feel are relevant to your own financial situation. You want to make sure that you find the best card you can when you compare credit card rewards programs.

All you have to do now is mark the table with the answers to properly compare credit card rewards schemes. By doing this process you will have taken all the confusion out of it and will end up walking away with a rewards card that is suited just for you.

Find out more details of these Reward Credit Cards

If you’re interested in finding out the more specific reward program details, such as point capping, point expiry and the real value of each reward point you earn, check out our reward program comparison page.

St George do not have a typical ‘points’ reward program, and thus are not listed here.

They do however offer Gold & Platinum credit cards which offer travel, insurance and security benefits.

How To Use A Rewards Credit Card

The first thing to say about using a rewards credit card is to use it sensibly. That means you should never spend on your card just to earn yourself points. However, there are certainly ways to maximise your points accumulation and make your rewards credit card work entirely in your favour, and not just to benefit your credit card provider.

Key points for points accumulation:

Spend on your card:

You cannot accumulate points on your rewards credit card if you do not spend any money on it. One key trick to start using your credit card for the everyday purchases, such as fuel and groceries, that you would usually use cash or a debt card to pay for. This means you will not be spending any more than you would normally, but you are now getting something back for that spending.

There is one huge caveat here, though: You must keep an eye on your spending and not look at the extra cash in your pocket or bank account as available to spend on other things. The cash you do not touch by switching everyday spending to your rewards credit card must be kept to pay off your credit card statement at the end of each month. This requires discipline to achieve, and if it goes wrong you will end up losing more than you gain, because you will not be able to pay off your balance at the end of every month, and you will then have to pay interest, thus negating any value of points earned.

Take advantage of bonus points offers:

These offers may apply to the first few months you own your rewards credit card, or they may appear every so often as you go along. With the former, you may be awarded extra points in the first few months, such as two points for one dollar, instead of the normal one point. Offers beyond this initial period will involve specific affiliated retailers or airlines. Again, the proviso with both these situations is that you do not spend on anything you would not have bought anyway. It’s perfectly okay to switch allegiance to a different retailer to take advantage of these offers, so long as you can genuinely justify your purchases as necessary. Ideally, you should have chosen your rewards credit card in the first place because the affiliated retailers or airlines are ones you regularly do business with.

Use your points:

Make certain you actually use the points you build up. Saving up for a large reward is one route to go down, but only if the conditions of your rewards credit card allow for this. Some schemes impose an expiry date on your points, so if they are not used within a certain time, they will be lost. Make sure you know if your scheme does this, and if so, make a note of when you must start thinking of redeeming them.

Pay off your balance each month:

This is a must, not just for rewards credit cards, but for any credit card. The interest charges that kick in on any unpaid part of your debt will go a long way towards canceling out the benefit of any reward points you may have earned in the previous month. In most cases, you will simply be out of pocket. Whilst this may be unavoidable if you have had to make certain essential purchases that bust the budget for that month, it is very silly if it has come about because you have been reckless for any reason.

Read the Terms & Conditions:

This is essential with rewards credit cards, as you will need to know exactly how they operate to take full advantage. For example, is there a stipulation that your points are nullified if you are considered in default because you fail to pay your minimum payment amount in time?

Balance transfers and cash withdrawals:

Be aware that you will not be awarded any points for either of these transactions. Moreover, balance transfers, whilst allowing for a lower interest rate, will attract a balance transfer fee, and cash withdrawals will be charged at a higher rate of interest that will activate the moment your cash leaves the ATM. Remember also that, according to the “adverse order of payments” method use by nearly all credit card providers, debts at the lower rate will be paid off first, so any balance transfer made to a rewards credit card will need to be wiped completely before purchases at a higher rate are touched. Rewards credit cards are therefore the wrong card to transfer a balance to, unless you are prepared to clear the rewards credit card balance first and then cease making any more purchases on it.

Is it worth getting a Credit Card with a Rewards Program?

There are an abundance of Australians who own a rewards credit card, yet who aren’t getting any benefit from it.

In fact, most of these people would be paying more in interest and fees than in value of the rewards they redeem. You should avoid a credit card with a rewards program if you ever:

• Pay interest on your balance.
• Don’t spend significant amounts on your credit card per year. This amount varies from card to card. Some require $12,000+ of spending, while others are as high as $60,000.
• The rewards are of no use to you.

Getting The Most Of A Reward Credit Card

Evaluate how you spend – The thing about these types of credit cards is they only benefit you if you are spending money, usually lots of money. In order to get anything significant back, you may have to spend far more then you would normally spend or even far beyond your budget. If you catch yourself spending extra just to earn points or spending more then you can afford to pay back each month, there is little chance any of the points or perks are still holding their value.

Watch those bonus points - A lot of offers lure customers with the promise of bonus points. Getting these points often requires you to spend a whole lot of money in a short period of time or to spend it at a specific place. An example of this are some of the airline cards which offer thousands of extra points in exchange for spending a lot of money with them. If you are not getting the best rate on your flight just to earn points then you are not really saving anything at all.

Avoid programs with an expiry or points cap – The best deal is a program that lets you earn as many points as you want on your time schedule. That way, you will never feel pressured to spend extra money to earn points or to use your points for something you do not really want before they expire.

Find a program that offers a good point to dollar ratio – What you really want in a reward scheme is to be able to earn points on all your spending without any added pressure to spend extra money on your plastic. If you get a card that offers simple terms like one point for every one dollar you spend with no cap and no expiry, you have made an excellent choice.

Choosing the right credit card for your budget takes real effort. Too many people get swept up in splashy advertisements instead of understanding the real nuts and bolts of an offer. Eventually they find that the benefits are not as great as they expected, or worse that they are in debt and have literally nothing to show for it. Be smarter with your choices and you can make your plastic truly prize worthy.

Paying Credit Card Interest on a Rewards Credit Card

Is it worth getting a rewards credit card if I don’t pay my balance in full each month?

Some of the most favoured types of credit cards amongst consumers in Australia are the reward credit cards. These are cards that reward their customers with points each time they spend money on them. Customers can then redeem their accumulated points, against a range of attractive gifts such as flights, electronic goods, high street vouchers, and other exclusive deals.

For example for each dollar you spend you may get 1-2 reward points, and after you have collected 10000 points you may be entitled to a $100 high street voucher, or something similar.

Interest Versus Rewards – What’s the Catch?

Well if these cards are used sensibly then there isn’t one. However the lenders are banking on our eagerness to be rewarded, to guide us into the land of high interest.

Very simply, if you are able to pay off any credit card balance you owe IN FULL each month, then these cards are very useful, and if you tend to spend regularly on them, you can obtain some very nice little freebies for your trouble.

However, if you a consumer who has trouble paying full credit card balances each month, and maybe gets by paying the minimum required payment, then these cards will cost you much more than you gain in free gifts.

Why Will I Lose Money?

If you are using a rewards credit card simply to try and obtain the points and rewards available, then what you must consider is this- the interest!

As a consumer who spends $1000 on the card each month but pays the balance in full, then at the end of 12 months, if you get a point for each dollar spent, you will have accumulated 12000 reward points, and had to pay no interest on the balance. If that’s the case then you have used this type of card to it’s potential, and you may have got yourself $100-$200 worth of flights, travel vouchers or high street gifts in return. The interest versus reward calculator shows you very much as a savvy consumer.

On the other hand if you spent the same $1000 dollars on the card each month, and only managed to pay half the balance each month, and were being charged 10% interest, then you will have over the year paid somewhere in the region of $600 worth of interest, and received the same $100-$200 dollar reward as your savvy counterpart. The interest versus reward calculator shows you at about $400 down!

Are Rewards Credit Cards Worth the Trouble?

If you spend regularly on your credit card, and pay your balance in full each month then yes. If you struggle to meet your monthly payments, then you’d be better rewarding yourself with a different type of card, with no rewards but maybe a lower interest rate. You will be much better off in the long run.

Most credit cards have an annual fee of around $60-250. Generally, you’ll need to spend $10,000 a year on a rewards card to offset an annual fee as low as $60. Therefore, if you’re spending less than this, let alone paying interest (which is very high on reward cards) there truly isn’t any benefit of owning a reward program card.

As a general rule of thumb, credit cards which offer high dollar to point conversion tend to cap (limit) the period in which you receive the high conversion rates.

Take a look at our selection of best credit cards or top low interest rate credit cards if you believe a rewards credit card is not suitable for you.

This page compares and offers credit cards with reward programs. To find out more about the reward programs themselves, view Credit Card Finder^®‘s unique stockpiling of reward program details.

Read more about reward program cards in our credit card reward program resources page.

Table of Contents: Guide to Rewards Credit Cards

• Compare rewards credit cards
• Which is the best rewards credit card?
• Best Reward Credit Cards ($12,000 Yearly Spend)
• Best Reward Credit Cards ($24,000 Yearly Spend)
• Best Reward Credit Cards ($60,000 Yearly Spend)
• Who Benefits Most From Credit Card Travel Rewards Points?
• Who Doesn’t Benefit As Well from Travel Rewards?
• How do rewards credit cards work?
• Points Redemption Options
• How do you earn your points?
• How to tread carefully with rewards credit cards
• The Different Types of Rewards Credit Cards
• How to use a rewards credit card
• Paying credit card interest on rewards Credit cards

* 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. ‘Best and ‘Top’ are ratings which are subject to our consideration and is not rated against all Australian credit cards. We recommend you take this information into account when comparing credit cards.