Here’s what everybody ought to know about earning and redeeming reward points when using travel rewards credit cards.
Travel rewards credit cards are not very different from frequent flyer credit cards, and there are instances when people use these terms interchangeably. Travel rewards cards allow cardholders to earn and redeem points for travel rewards. The different ways you can accumulate and use your points will depend on which card you’re using and the rewards program it’s linked with. Extra features like complimentary travel insurance covers and access to a concierge service could also be on offer when using a travel card. A rewards card is only of value if the rewards and benefits offset the cost of the card, so you’ll need to compare your options to find the right one for you.
Travel Rewards Credit Card
The ANZ Rewards Platinum credit card account offers up to 3 Reward Points for every $1 of eligible purchases with no limit on the number of points earned.
- New accounts get 50,000 Reward Points after your first eligible purchase when you apply by 20 August 2015
- $149 p.a. annual fee
- Earn up to 3 Reward Points for every $1 spent on everyday purchases using the ANZ Rewards American Express card® and 1.5 Reward Points per $1 spent on everyday purchases using the ANZ Rewards Visa card.
Travel rewards credit card comparisonRates last updated August 4th, 2015
Table of contents: Guide to travel rewards credit cards
- Compare travel rewards credit cards
- How do I to earn points?
- What sort of rewards can I get?
- Pros and Cons of Travel Rewards Credit Cards
- How to compare travel rewards credit cards
- Tips to using rewards credit cards
How can I earn points with a travel rewards credit card?
Just how you earn reward points depends on where you use your card, and bear in mind that cash advances and balance transfers don’t earn reward points. When it comes to earning points, here’s how:
- Use your card for everyday spending. You would stand to earn reward points every time you make an eligible purchase, and by using your card to pay your everyday purchases, you can earn reward points on a regular basis. Bear in mind, though, that you should aim to pay the account’s closing balance in full each month, failing which you could end up paying a fair amount as interest.
- Shop with credit card loyalty partners. Most rewards credit cards give you a list of loyalty partners, shopping through whom gives you the ability to earn bonus points.
- Introductory bonus points. A number of rewards credit cards offer bonus reward points to new cardholders, though sometimes you’ll need to spend a certain amount within a set period to claim them.
What are my points worth?
The reward points you will earn will depend on the card you use, with most regular rewards card offering one reward point for every dollar spent. While knowing how many points you earn per dollar spent is important, it’s also important that you translate them into dollar value.
Consider this: If you take a return flight with Qantas from Melbourne to London you stand to earn around 21,000 frequent flyer points. On the other hand, if you spend an average of $400 per month using your card, it would take you around four and a half years to earn as many points.
Taking the same example further, to upgrade from Economy to Premium Economy you would need 24,000 points, and you would take up to five years to earn these many points by spending around $400 per month. Upgrading to Business would require 60,000 points, and you can guess how long that would take.
You should watch out for hidden costs in the form of surcharges, fees, and taxes, which can vary from one airport to the next. If you don’t use your points for a while, they might not be worth as much down the line, so it makes sense to redeem them periodically. Some reward programs come with expiry of reward points, so if you don’t use your points within a given time frame you stand to lose them completely.
How can I check how many points I have?
You can keep a track on the reward points you earn and redeem through your reward program’s website and over the phone, and you should be able to view your points balance on your credit card statements as well. Some reward programs come with apps for smartphones, making it easy to monitor your account on the go.
How can I redeem my points?
Credit card providers that offer travel rewards cards tend to give cardholders the ability to redeem their accumulated points online, through the rewards program’s website. These websites give you a clear indication of all the rewards currently on offer, and just how many points you need to get them. If you like a reward you see, you redeem your points and get it online. You would also have the option redeem your reward points for any given reward over the phone. Some reward programs give you the ability to claim rewards using a combination of points and cash.
What can I redeem my points for?
This will vary according to the card you’re using, but here are some of the standard rewards you can expect from most travel rewards cards:
- Travel costs. You can use your reward points to book flight tickets, and you can also use them for flight upgrades. Some rewards cards allow you to transfer your points to your frequent flyer program account.
- Holidays. You can redeem your points for holidays, which could include airfare, accommodation, and meals.
- Merchandise. You would have the option to redeem your reward points for merchandise spread across categories like fashion, electronics, furniture, kitchen appliances, home entertainment and more.
- Cashback. Certain rewards credit cards give you the option to use your points as cashback, where your points work in reducing your credit card’s outstanding balance.
How can I compare travel cards?
When you’re looking for a travel rewards credit card make sure you also take air miles credit cards and frequent flyer credit cards into account because the benefits on offer are essentially the same. Pay attention to the following aspects when you’re narrowing down on suitable options.
Who are travel rewards cards best suited to?
- Regular flyers. These cards work well for people who fly frequently, whether for business or pleasure. If you’re a member of a frequent flyer program, you can look for a card that allows you to transfer your reward points to your frequent flyer program account.
- Holidaymakers and travellers. If you’re the kind of cardholder who likes to go on vacations from time to time, you can consider getting such a card to offset part of your travel costs with travel rewards.
- Regular credit card users. If you use your credit card regularly, it makes sense to get a card that rewards your spending. Watch out for high interest rates, though, especially if you’re in the habit of keeping balances rolling over from one month to the next.
Who are travel rewards cards not suited to?
- Infrequent travellers. If you don’t travel much, you might want to consider getting a low rate no-frills card.
- Impulse spenders. These cards tend to charge higher interest rates when compared to their no-frills counterparts, and using these cards for impulse purchases can have you paying a tidy sum in the form of interest, especially if you don’t pay your account’s closing balance in full each month.
- Those with poor credit history. You stand little to no chance of getting a travel rewards card if you suffer from poor creditworthiness, and applying would only have affect your credit rating negatively.
What should I look for when comparing travel rewards credit cards?
Comparing travel rewards credit cards requires that you pay attention to several aspects, which include the following.
- Partners. Rewards programs come with partners of two kinds. One kind allow you to earn bonus points when you use your card to pay for their products or services, and the other kind give you easy means to redeem your accumulated points.
- Variety of rewards. Make sure the rewards on offer appeal to you. If you’re not a frequent traveller and the card only offers travel-related rewards, you may want to consider a program that also allows you to earn and redeem points for everyday items as well.
- Air miles and frequent flyer schemes. Find out if a rewards program gives you the ability to earn air miles or if it allows you to transfer your points to your frequent flyer program account. Check if you’ll have to pay a joining or ongoing fee to be a part of any given frequent flyer program.
- Bonus points and introductory incentives. Some cards offer bonus points to new cardholders, and some others give cardholders the ability to earn extra points during the initial period, so take advantage of these when you can.
- Points per dollar. While this should give you some indication of how one card rates against another, converting points to dollar value gives you a better picture.
- Extra benefits. Extra benefits can come in the form of complimentary insurance covers and access to a concierge service. Know that card providers make up for these added features by charging higher annual fees and higher interest rates, so establish if you’ll make use of such features at the onset.
- Interest rate and fees. Don’t forget to compare the interest rate and the annual fee. If the cost of the card outweighs the benefits, it’s not of value.
How do I use my travel rewards card?
While travel rewards are a great way to receive benefits for your purchases, there are a few things you’ll need to keep in mind to ensure you’re making the most of your card:
- Use your card often. The more you spend using your card, the more reward points you earn, so it makes sense to use your credit card as often as possible. You can use your card to pay for groceries, fuel, utility bills, phone bills, and more. However, only pay for what you can afford to pay off by the end of the month, otherwise the rewards points will pale in comparison to the added interest.
- Loyalty matters. If you like a loyalty partner or more, it makes sense sticking with them, because you stand to earn reward points faster.
- Honeymoon offers. Take advantage of your card’s introductory offers, because this can be a great way to earn a significant chunk of points from the get-go.
- Additional cards. While additional cards linked to rewards cards earn points, bear in mind you remain liable for all purchases made using such cards.
- Fly more frequently. With certain reward programs you can boost your points by flying more frequently. Buying tickets using your card could give you a significant number of points, and don’t be surprised if several short domestic trips result in more points than the points you earn for a long-haul international flight. Paying for your flight tickets using your card can also bring with it bonus points, travel perks, and a preferential interest rate.
- Avoid cash advances and balance transfers. Both don’t earn reward points. With cash advances, you have to start paying interest from the word go, and you could have to pay additional cash advance fees. With balance transfers, if you don’t pay the transferred balance within the promotional period, you could end up paying a considerably high-interest rate later.
What are the pros and cons of using a travel rewards credit card?
- Earn points as per spending. Keep paying your account’s outstanding balance in full each month, and make the most of earning points as per your spending.
- Earn bonus points. When you use your card with your card provider’s affiliated partners, you stand to earn reward points faster.
- Free flights. Frequent flyers can accumulate a large number of points in short spans of time by paying for their flight tickets using their rewards credit cards, and they can then redeem their points for flight tickets.
- Complimentary travel insurance. A number of travel rewards credit cards come with complimentary travel insurance covers. Even if you have to pay an annual fee, buying these insurance covers separately would cost more.
- High-interest rate and fees. You can expect a travel rewards card to charge a high interest rate on purchases, which can be a problem if you don’t pay the outstanding balance in full every month. The annual fee would also be on the higher side.
- Limitations. Most rewards travel cards pose restrictions on how you can earn points and what you can redeem them for. Pay close attention and work out whether it will benefit you before you sign up.
- Points cap or expiry. If your points become capped or expire at a certain point, this can significantly limit your points earning ability. Read over the terms and conditions of your rewards program to confirm these details.
Whether or not you can benefit by using a travel rewards credit card will depend on a number of factors including your ability to pay your account’s balance in full each month, the annual fee it charges, and specifics linked to its rewards program.
If you feel you can make the most of such a card, take some time to establish just what you’re after, and since there are a number of such cards on offer in Australia, compare as many as possible before making a decision.
Frequently asked questions
If I use my travel rewards card overseas would I have to pay overseas transaction fees?
Most Australian credit cards, when used overseas, charge cardholders overseas transaction fees, which can be a fixed amount or a percentage of the transaction amount.
How easy is it to transfer my credit card’s reward points to my frequent flyer program account?
You have to first check if this is possible with your credit card provider, and if it is, your card provider would tell you just what to do. The process should be easy and should not take long to complete.
What is cashback?
In reference to reward points, cashback refers to redeeming points to reduce your credit card’s outstanding balance. Some credit cards allow you to redeem points for cashback only to pay the card’s annual fees.
Now you know everything there is to know about Travel Rewards Credit Cards!