Compare the value of rewards points between the various rewards programs
The rewards points debate:
The credit card debate has two sides. The first side has people that use their credit cards wisely. They use their rewards points to make purchases, and they leave their money in the bank gathering interest until the end of the month when they pay off all the balance on the credit card. They believe that personal responsibility must be used by anyone that takes a card to receive rewards points.
They will say that it is not the credit cards that are to blame, but the people that use them. They are in fact only a tool and you can make of them what you will. They can be either useful or not, depending on what you use them for.
The next group of people believe that credit cards should not be used for any reason because the banks offering these credit cards are not using proper business practices and encourage overspending for a lot of people. Credit cards create a distance between money and the shopper, which can be quite dangerous.
For many people credit cards have ruined their lives. Many have succumbed to a heavy debt with the higher interest rates, terms that are not clear, the temptation to spend more and an inability to manage their finances.
Reward Program Credit Card Offer
The American Express Platinum Edge offers high points earning ability with platinum privileges. Also enjoy a complimentary Virgin Australia domestic economy return flight each year.
- $195 p.a. annual fee
- 20.74% p.a. on purchases
- 0.99% p.a. for 6 months with 1% balance transfer fee on balance transfers
- 55 days interest free
- Minimum Income Requirement of $50,000 p.a.
Reward Program Credit Cards Comparison
We take only a few popular products and services to redeem in order for an easy and quick comparison.
- The $100 Myer/Caltex Vouchers are the reward point cost of the voucher. If the card is not available, a similar retailer/petrol station card will be substituted i.e David Jones, Harvey Norman, Shell or BP. If a $100 card is not available, then a $20, $25 or $50 voucher will be used and multiplied accordingly to give the reward point cost of $100.
- The ‘Flight Syd to Melb‘ is the point cost of the average discount flight from Sydney to Melbourne. Some providers may only let you fly on specific dates, typically in the middle of the week when it’s cheaper. If the reward’s program does not directly offer flights as redeemable rewards, a travel voucher will be used in its place. For the sake of this table, we will assume an average discount fare from Sydney to Melbourne costs $100.
- The ‘Cashback Value‘ is how many points you need to redeem for $1 of credit or cash (subjective to what the program offers). No program actually allows you to redeem in $1 increments, more commonly you can receive cashback in $25, $50, $100, $200 or $250.
- The ‘Average $ Value of Point‘ is taken as an average from a wider range of products than the ones listed below. The higher, the more value.*
- Point Expiry: Some reward programs have point expiry for the points you have earned. Most of the time, if the program has point expiry they will most likely expire 1-5 years after they have been accumulated. Others have more specific conditions such as point expiry when your account falls out of good standing.
- Point Capping: There are two forms of point capping. The first is done in order to entice consumers, reward programs will sometimes offer a high dollar:point ratio as an introductory offer, such as “3 points for every dollar you spend on your card”. If you analyze the fine print, you’ll find that this will only apply to the first $5,000 or so spent on your card per year. Others have a standard hierarchy of point capping, with a tiered system which progressively gives you less points after certain spending milestones per year. The other type of point capping will simply have a cap on how many reward points you can earn per year/month.
Even if a reward program is listed as ‘No‘ for Point Expiry, this is assuming that the account remains open. If your account becomes un-current, points will typically expire from 12-36 months.
Take note that on the surface of this table, the value can be misleading – while most reward programs offer 1 reward point for every $1 spent, many have promotional reward point offers which allows you to quickly accumulate points, and raise the value equation in your favour.
Every consumer has their own individual spending patterns, financial leanings and levels of income, and thus will have to take their own circumstances into account when judging what reward program is best for them.
What are interchange fees?
These are the fees that the acquiring bank, the merchant’s bank, pays the issuing bank, the customers bank, when merchants use cards such as MasterCard and Visa for purchases. These are typically a percentage of the purchase price in total with taxes included, plus a flat fee. This fee adds up to approximately 2% of the value of the transaction.
Some very big merchants may be able to negotiate the fee prices, and these interchange fees have been part of a regulatory and antitrust investigation. Smaller merchants would prefer the customer to use debit cards or cash, but they cannot refuse to take these credit cards, even when the fees go over the profit margin. Some countries have lower fees and some have higher.
The cost of these fees must be passed over to the consumer in the form of higher prices. Merchants are not allowed to tell consumers about these fees, according to the rules of the credit card companies, during any transaction.
Consumers are paying billions of dollars to pay for these hidden fees on top of all of the other fees charged by their credit card issuers such as late fees, over the limit charges and interest. These interchange fees do not appear on any statements.
In reality what is happening is every consumer, whether they use a credit card or not, is paying for this interchange fee by paying extra money for their items.
Merchants are not allowed to tell consumers how much this fee information really is. Merchants are charged a flat fee plus a percentage for every purchase made, but they can not legally ask for a minimum purchase amount before people can use their credit cards. By using credit cards we are supporting an industry that is causing the prices of goods to rise, for the vulnerable and the poor as well.
Using credit cards with this hidden fee costs us a lot more money than we could ever make back using rewards points. The banks make a lot of money and use rewards points to make us think that we are actually making money. Credit card banks generally equate one reward points into approximately .65 unit cash, instead of one point equaling one unit of cash.
A look at personal responsibility and rewards points:
This is an argument used by those who advocate rewards points programs, but it does not really take into account the less fortunate and poor people.
Universities and alumni associations are paid millions of dollars to sell personal information about their alumni, faculty, staff and students to credit card banks.
Poor people and others that have a bad credit history are still offered cards at an incredible interest rate of 20%+ instead of refusing to give them credit or lower interest rates.
People who have previously gone through bankruptcy are currently the target market for credit card companies.
This has become a moral and ethical issue that seeds to be addressed. It will be up to the individual to decide if these rewards points are really worth it or not. Every time you make a purchase you have the choice to make. It comes down to making a stand for the common people and not merely taking the easy way out. Most people will not take a stand and it doesn’t really matter if they do or don’t, as long as you stand up for your beliefs.
Want to compare Australian reward program credit cards directly? Click here for a comparison table of leading reward cards.
The following are online reward catalogues for each credit card provider. If a bank is not listed above, it will most likely be due to the fact you need to be a member to view some rewards catalogues online.
- American Express ‘Membership Rewards’
- ANZ ‘Rewards’
- ANZ ‘Balance’
- Bankwest ‘Business Rewards‘
- Bankwest ‘More Rewards‘
- Bendigo Bank ‘Rewards‘
- Citibank ‘Rewards’
- Commonwealth ‘Awards’
- GE Money ‘GO Rewards‘
- Macquarie Bank ‘Platinum Rewards‘
- NAB ‘Gold‘
- HSBC ‘Rewards Plus‘
- Qantas ‘FrequentFlyer‘
- St.George ‘Instant Benefits‘
- Suncorp ‘Clear Options Rewards’
- Westpac ‘Altitude‘
- Woolworths Everyday Money‘
The information here is current as of March 29th 2009. The information and statistics on this page are all derived from independent research, and should only be used as a rough and simple guideline to compare reward point currencies and programs.
Any reward program is subject to change, and while we will be diligent to keep up with alterations, we can not keep up as fast as the banks. If a link is broken or a feature out of date, we would appreciate your help by contacting us.