Credit Card Rewards Programs

Best Value Rewards Program Credit Card

The ANZ Frequent Flyer Credit Card is the best value rewards program credit card as you can earn Qantas Frequent Flyer points simply by using one of two cards on the one account on everyday purchases. There is also no caps or expiry on Qantas Frequent Flyer points earning so you can see your frequent flyer points grow each and every month.

• $95 annual fee
• 19.49% p.a. on purchases
• 2.9% p.a. for 12 months on balance transfers
• Cash Advance Rate of 20.74%
• Qantas Frequent Flyer points automatically credited to Qantas Frequent Flyer account every month.

Click here to read the ANZ Frequent Flyer – Balance Transfer Option terms and conditions

Find out the pros and cons of rewards credit cards so that you can avoid falling into the traps. Understand the best options available and how to make credit card rewards programs work in your favour.

There is such an array of rewards credit cards out there that you can feel you are missing out if you don’t have one. However, many of the rewards programs are not what they may first appear. The sparkle has been taken off some of them in the past few years, what with higher interest rates, lower points conversion rates, and points caps. This is made even worse if you are also asked to pay a fee for belonging to the program.

The best scenario with a rewards program is when you never pay interest on your credit cardbecause you clear your balance each month, and you are not paying for the program, nor paying for a “hidden” fee that is wrapped up in a higher annual fee for the card itself. If you do pay interest on your credit card, then the cost of that interest will outweigh any benefits you may gain from points earned in a rewards program, even if that program is free. Your best bet in that situation would be to find the credit card with the lowest rate of interest and a reasonable annual fee to boot.

On average, if you are paying a fee for your credit card rewards program, you will need to be spending at least $1,000 a month on the card to break even. Anything less of a spend and you are actually losing out. You really need to be spending over $2,000 a month and not paying interest to really take advantage of a paid-for rewards program.

Best value rewards programs

The best rewards program must be assessed based on how well-matched its rewards are to your personal requirements. It should also have no points cap that punishes high spenders, nor any expiry on your points so that you are forced to redeem them before you have saved for something you really want.

Where there is no separate fee for the rewards program, make sure by means of comparison that you are not being charged for the program through a higher annual credit card fee. This is easy to deduce by taking a look at cards with similar features and rates and seeing if their annual fees are around the same as the one with the program.

Types of reward available

Most programs offer a range of rewards options, although some may sell themselves more on one reward above another.

* Frequent Flyer points
* Cashback, where your card is credited with a cash amount
* Travel rewards
* Shopping vouchers and gift cards
* Entertainment rewards
* Dining out and food & beverage rewards
* Automotive rewards, such as fuel discounts
* Electronics rewards
* Lifestyle rewards, such as health & beauty vouchers or days out

Flights

Flights have been a popular reward since rewards programs started, but conversion rates for Qantas Frequent Flyer points are not what they used to be in all cases. Rather than go for a specific Frequent Flyer program, it could be better to choose a travel rewards program that will include flights from a wide range of airlines and offers better value.

You should compare regular travel reward points against Frequent Flyer points and see which comes out best value. Remember, though, that there will be taxes to pay on top of the the cost of the flight, so make sure you are comparing just the flight component to get a like-for-like comparison. You may also be allowed the option of topping up your rewards points with a credit card payment.

The points cap

This is a disingenuous restriction as it reduces the effectiveness of your rewards credit card. Caps place a limit on how many points you can earn in a certain period, which may be monthly or annually. The other cap concerns a sliding scale where the more points you earn, the lower their conversion value. This obviously stops you claiming the better rewards in a shorter time-frame, and can ruin the whole point of using your credit card where you may have used cash, debit or cheque.

Gold and Platinum cards

These more prestigious card usually – but don’t always – carry a higher annual fee, and may also charge for being a part of their rewards program. This is okay if you choose a card that has no points cap and you use your card for regular spending so that you earn a high number of points. They often also include various complimentary perks and benefits, such as travel insurance and extended warranty on goods, the value of which can easily pay for the annual fee.

Rewards programs attached to platinum or gold cards that have a significantly higher fee may only be financially viable if you are spending around $5,000 each month on the card.

The obvious drawback for some people is that they are ineligible because they do not earn enough income to qualify for the card in the first place.

They key with rewards programs, as with any aspect of credit cards, is to do your homework and make sure you are getting the best deal to suit your needs.

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0