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

Frequent flyer credit cards offer you points per dollar spent, but do the rewards outweigh the costs?

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.

Qantas Premier Platinum

Receive 75,000 bonus points
Pay a discounted annual fee of $149 for the first year

Offer ends 31 January 2018

Eligibility criteria, terms and conditions, fees and charges apply

Qantas Money Credit Card Offer

Earn 75,000 bonus Qantas Points. Plus, enjoy 0% p.a. for 15 months on balance transfers and a range of platinum card and travel benefits.

  • $149 p.a. annual fee for the first year ($299 p.a. thereafter).
  • 19.99% p.a. on purchases
  • Cash advance rate of 21.99% p.a.
  • Up to 55 days interest free
  • Minimum income requirement of $35,000 p.a.
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Compare frequent flyer credit cards

Rates last updated November 24th, 2017
Name Product Bonus Points Rewards Points per $ spent (VISA/MC) Rewards Points per $ spent (AMEX) Purchase rate (p.a.) Annual fee Product Description
Qantas Premier Platinum
75,000 bonus points
1
19.99% p.a.
$149 p.a. annual fee for the first year ($299 p.a. thereafter)
Fly faster with up to 2 Qantas Points per $1 spent, receive 2 yearly complimentary Qantas Club lounge invitations, plus, included travel insurance.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
60,000 bonus points
0.66
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Earn up to 60,000 bonus Velocity Points in the first 3 months on eligible spend and enjoy a discounted annual fee of $64 for the first year.
HSBC Platinum Qantas Credit Card
60,000 bonus points
1
19.99% p.a.
$199 p.a.
Receive a complimentary Qantas Frequent Flyer membership and take advantage of complimentary international travel insurance.
Virgin Australia Velocity Flyer Card - 0% Interest Offer
0.66
0% p.a. for 12 months (reverts to 20.74% p.a.)
$129 p.a.
Receive a $129 Virgin Australia Gift Voucher each year, save with up to 44 interest-free days and complimentary international travel insurance.
Citi Platinum Credit Card - 100k Bonus Points
100,000 bonus points
1
20.99% p.a.
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
Earn 100,000 reward Points, take advantage of a long-term balance transfer offer and receive complimentary travel insurance.
ANZ Frequent Flyer Platinum
65,000 bonus points
0.75
19.99% p.a.
$0 p.a. annual fee for the first year ($295 p.a. thereafter)
Earn Qantas Points and take advantage of complimentary international travel insurance and a 24/7 concierge service.
Citi Rewards Platinum Credit Card
1
20.99% p.a.
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
Earn Reward Points per $1 spent as part of the Citi Rewards Program, plus receive complimentary international travel insurance.
ANZ Frequent Flyer Black
75,000 bonus points
1
19.99% p.a.
$0 p.a. annual fee for the first year ($425 p.a. thereafter)
Collect 75 bonus Status Credits when you meet the spend requirements. Plus, enjoy two complimentary Qantas Club Lounge invitations each year.
Qantas American Express Discovery Card
1
20.74% p.a.
$0 p.a.
Earn Qantas points that can be redeemed for a one way, return or multi-destination Classic Flight Reward on over 50 partner airlines.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0.66
20.74% p.a.
$129 p.a.
Earn 3 bonus Velocity Points per $1 for the first 3 months, a first year annual fee refund and a yearly $129 Virgin Australia Gift Voucher.
Bendigo Bank Qantas Platinum Mastercard
0.6
19.99% p.a.
$149 p.a.
Earn 0.6 Qantas Points per $1 spent. Plus receive 180 days comprehensive travel insurance and a range of purchase insurance covers.
American Express Velocity Escape Card
1
20.74% p.a.
$0 p.a.
Earn uncapped Velocity points on purchases and redeem for a range of rewards including flights, accommodation, car hire and gift cards.
Qantas American Express Ultimate Card
55,000 bonus points
1.5
20.74% p.a.
$450 p.a.
Take advantage of a high Qantas Points earn rate and two American Express Airport Lounge entries each calendar year.
American Express Explorer Credit Card
50,000 bonus points
2
20.74% p.a.
$395 p.a.
Receive a $400 Travel Credit every year and up to two entries per year to the American Express Lounge at Sydney International Airport.
American Express Essential Credit Card
1
14.99% p.a.
$0 p.a.
Get Smartphone Screen Insurance of up to $500 when you pay for your phone or contract with your Essential Credit Card.
Virgin Australia Velocity High Flyer Card - 80k Bonus Points offer
80,000 bonus points
1
20.74% p.a.
$289 p.a.
Receive a $129 Virgin Australia gift voucher when you meet the spend requirements plus 2 Virgin Australia domestic lounge passes per year.
NAB Rewards Signature Card
100,000 bonus points
1.25
19.99% p.a.
$295 p.a.
Take advantage of complimentary travel and purchase insurances, a 24/7 concierge service and up to 44 interest free days.
NAB Qantas Rewards Signature Card
100,000 bonus points
1
19.99% p.a.
$395 p.a.
Earn Qantas Points on your everyday spending, take advantage of complimentary overseas travel insurance and a 24/7 concierge service.
American Express Qantas Business Rewards Card
100,000 bonus points
1.25
$450 p.a.
Earn up to 2 Qantas Points per $1 spent on eligible purchases and enjoy up to 51 days interest-free on purchases.

Compare up to 4 providers

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 November 24th, 2017
Name Product Bonus Points Rewards Points per $ spent (VISA/MC) Rewards Points per $ spent (AMEX) Purchase rate (p.a.) Annual fee Product Description
ANZ Frequent Flyer Black
75,000 bonus points
1
19.99% p.a.
$0 p.a. annual fee for the first year ($425 p.a. thereafter)
Receive 75,000 bonus Qantas Points when you apply online, are approved and spend $2,500 on eligible purchases in the first 3 months.
ANZ Frequent Flyer Platinum
65,000 bonus points
0.75
19.99% p.a.
$0 p.a. annual fee for the first year ($295 p.a. thereafter)
Get 65,000 bonus Qantas Points when you apply online, are approved and spend $2,500 on eligible purchases within the first 3 months.
Qantas American Express Discovery Card
1
20.74% p.a.
$0 p.a.
Earn Qantas points that can be redeemed for a one way, return or multi-destination Classic Flight Reward on over 50 partner airlines.
ANZ Rewards Platinum
65,000 bonus points
1.5
18.79% p.a.
$0 p.a. annual fee for the first year ($95 p.a. thereafter)
Receive 65,000 bonus Reward Points when you spend $2,500 within the first 3 months from card approval.
American Express Velocity Escape Card
1
20.74% p.a.
$0 p.a.
Earn uncapped Velocity points on purchases and redeem for a range of rewards including flights, accommodation, car hire and gift cards.
ANZ Frequent Flyer
25,000 bonus points
0.5
19.99% p.a.
$0 p.a. annual fee for the first year ($95 p.a. thereafter)
Get 25,000 bonus Qantas Points when you apply online, are approved and spend $2,500 on eligible purchases within the first 3 months.
Woolworths Everyday Platinum Credit Card
1
19.99% p.a.
$0 p.a. annual fee for the first year ($49 p.a. thereafter)
Receive a $50 eGift Card when you apply by 31 January 2018 and make an eligible purchase by 28 February 2018.

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  • 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

Enjoy 65,000 bonus Qantas Points and a waived annual fee for the first year. Also earn Qantas Points per $1 spent on eligible purchases.

  • $0 p.a. annual fee for the first year ($295 p.a. thereafter)
  • 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 November 24th, 2017
Name Product Bonus Points Rewards Points per $ spent (VISA/MC) Rewards Points per $ spent (AMEX) Purchase rate (p.a.) Annual fee Product Description
HSBC Platinum Qantas Credit Card
60,000 bonus points
1
19.99% p.a.
$199 p.a.
Receive 60,000 bonus Qantas Points when you meet the spend requirement and earn up to 1 Qantas Point per $1 spent.
ANZ Frequent Flyer Platinum
65,000 bonus points
0.75
19.99% p.a.
$0 p.a. annual fee for the first year ($295 p.a. thereafter)
Get 65,000 bonus Qantas Points when you apply online, are approved and spend $2,500 on eligible purchases within the first 3 months.
Emirates Citi World Mastercard
60,000 bonus points
1
0
20.99% p.a.
$149 p.a. annual fee for the first year ($299 p.a. thereafter)
Earn up to 1.5 Skywards Miles for every $1 spent and indulge in carefully curated local and global experiences.
Bankwest Qantas World Mastercard
0.66
20.49% p.a.
$270 p.a.
Earn uncapped Qantas Points per $1 spent on eligible purchases. Also enjoy 0% foreign transaction fees on online and overseas spend.
Virgin Australia Velocity High Flyer Card - 80k Bonus Points offer
80,000 bonus points
1
20.74% p.a.
$289 p.a.
Take off sooner with up to 1 Velocity Point per $1 spent and earn up to 80,000 bonus Velocity Points. Plus, complimentary travel insurance.
NAB Velocity Rewards Premium Card
0.66
19.99% p.a.
$150 p.a.
Offers up to 0.66 Velocity Points per $1 spent on purchases, combined with complimentary insurance covers and a concierge service.

Compare up to 4 providers

    • 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 November 24th, 2017
Name Product Bonus Points Rewards Points per $ spent (VISA/MC) Rewards Points per $ spent (AMEX) Purchase rate (p.a.) Annual fee Product Description
ANZ Frequent Flyer Black
75,000 bonus points
1
19.99% p.a.
$0 p.a. annual fee for the first year ($425 p.a. thereafter)
Earn 75 Bonus Status Credits when you apply by 24 January 2018, buy and fly return with Qantas by 31 May 2018.
American Express Explorer Credit Card
50,000 bonus points
2
20.74% p.a.
$395 p.a.
Receive a $400 Travel Credit every year and up to two entries per year to the American Express Lounge at Sydney International Airport.
ANZ Rewards Black Credit Card
75,000 bonus points
2
18.79% p.a.
$0 p.a. annual fee for the first year ($375 p.a. thereafter)
Receive access to participating Véloce airport lounges outside of Australia and a personal 24/7 concierge.
Citi Prestige Card
150,000 bonus points
3
20.99% p.a.
$700 p.a.
Earn from 1 Point per $1 spent on selected purchases and enjoy unlimited airport lounge access with a complimentary Priority Pass.
Bankwest More World Mastercard
115,000 bonus points
2.5
19.99% p.a.
$270 p.a.
Earn 2.5 More Rewards Points per $1 spent and receive complimentary travel insurance.

Compare up to 4 providers

  • 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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