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Are Rewards Credit Cards worth the effort?

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You can find rewards cards to suit just about any lifestyle, though you may find that racking up points to earn rewards comes with planning and hard work.

Sometimes referred to as “loyalty cards”, a rewards credit card are designed to rewards cardholders for their purchases. This perk of redeeming rewards for everyday purchases is what has made these cards attractive to so many Australians. In order to reap the benefits of a rewards card, you'll have to spend some money first. How much you can earn and what you can redeem your points for will help determine which rewards credit card is right for you.

Keep in mind that there is no such thing as the ideal rewards credit card though, and the right choice will always depend on your individual financial needs, spending habits and rewards goals. Weighing up the pros and cons of the card is a wise way to determine whether the card is of value to you before you consider applying.

We've made it easy for you by highlighting some of the major pros and cons you can expect when using a rewards credit card below.

What are the pros and cons of a rewards credit card?

Some of the benefits you can expect when using a rewards credit card include:

Pros

  • The rewards. Rewards are, of course, the main drawcard. Whether you're racking up points to save and use later, redeem for merchandise or travel bonuses, or use for a cashback discount off your total, shopping with a rewards credit card offers a variety of rewards options.
  • Bonus points. Some credit cards offer bonus points for new customers when you sign up. These usually have the same value as regular points and can help you kickstart your points balance from the get-go.
  • Diversity. There are a variety of rewards programs on the market, so you're bound to find one that works with your lifestyle. If you're a globetrotter, a rewards credit card that is linked with a frequent flyer program which can earn flight discounts and travel rewards could be of interest. If you have a family and use your credit card for everyday purchases, a card that allows you to earn points at the supermarket could be a better fit. Compare your options and pick the card that offers the rewards you'll get the most value from.
  • Instant savings. If you tend to shop at one store, or always look for a certain brand, you could find a card that rewards you instantly on those purchases. You’ll see your savings right there on your receipt, just for using the card. Some store loyalty cards will even give you cashback in the form of a store gift card once you have reached a certain point allowance.
  • Travel insurance. Some rewards cards, such as frequent flyer cards, offer extra benefits such as complimentary travel insurance. If you're a regular jet setter, such extras could help reduce your travel costs.
  • Cashback. Some cards offer cardholders cashback that can be used to repay your credit card balance. If your balance is starting to build up, this redemption option could help keep your credit card costs to a minimum.

Cons

Rewards credit cards come with some risks. Before applying for one, familiarise yourself with the potential pitfalls:

  • Spending more than normal. With the incentive of a reward to look forward to, some cardholders are tempted to make purchases for the sake of earning rewards. Remember that you'll need to repay the balance, otherwise accumulated interest could counteract any value you've received from your rewards.
  • Monetary value. Although dollars can add up to points, the same is not true in reverse. The actual cash value of earned points is just a fraction of what you paid to get it. This could mean having to spend thousands of dollars just to receive one reward that would normally only cost a few hundred.
  • High interest rates. The interest rates on these cards tend to be higher than other cards. Unless you are paying off your balance in full each month, this could mean that the rewards benefit is being lost in high interest payments.
  • Fees. Along with the high interest rates, rewards cards often come with high annual fees. This can also offset the value you receive from your rewards.
  • Restrictions. Most rewards credit cards restrict the ways in which cardholders can earn and redeem rewards. For example, frequent flyer cards can only be used for discounts with a particular airline and their partners. Make sure that you understand how you can earn points and redeem your rewards to ensure it compliments your spending habits and lifestyle.
  • Point capping and expiry. Many cards only allow cardholders to earn a certain amount of points per year. If you use your credit card regularly and have the potential to earn points beyond this cap, such restrictions could limit the value of the card for you. Do you plan to save your points over time to redeem for a larger reward? Make sure you know when your points expire, otherwise you could lose them before you get a chance to redeem them.

What should I be wary of when comparing rewards credit cards?

Some extra factors to consider when comparing rewards credit cards include:

  • Exorbitant rates and fees. The lure of rewards can make it easy to overlook rates and fees that are above average, yet these can quickly negate any benefit that earning rewards would bring.
  • Your spending habits. Don’t choose a card that will force you to change your spending habits in order to earn points. Check the partners carefully to ensure that they include merchants where you would normally shop.
  • Points to dollar ratio. Some cards have a set ratio no matter where you use your rewards credit card, while others tier the points depending on where you spend. This system can help you earn points faster but only if the extra points are earned through merchants you typically shop with.
  • Rewards. Don’t get tied into a rewards card program that doesn't offer rewards that are of interest to you. For example, if you don’t travel frequently avoid the frequent flyer rewards cards and look at those where you can redeem points for merchandise.
  • Capped points. If you do shop frequently with a credit card you will want to look at the number of points allowed per year. There are some cards which do not cap the points allowed, making every dollar spent with the card worth it.
  • Expired points. Another thing to consider is whether the points will expire. Some rewards cards will require you to use earned points within a certain time frame or else they will be removed from your balance.

If used correctly, a rewards credit card can be a valuable way to earn rewards for your everyday purchases and loyalty. However, as there are a number of rewards credit cards options on the market, it's always best to compare your options before selecting your card.

Compare credit cards that reward you for spending

Data indicated here is updated regularly
Name Product Bonus points Rewards program Rewards points per $ spent Purchase rate Annual fee
NAB Qantas Rewards Signature Card
130,000
Qantas Frequent Flyer
1
19.99% p.a.
$295 annual fee for the first year ($395 p.a. thereafter)
Collect up to 130,000 bonus Qantas Points. Get 100k when you spend $3,000 on eligible purchases in the first 60 days and 30k after 12 months.
ANZ Frequent Flyer Black
130,000
Qantas Frequent Flyer
1
20.24% p.a.
$425
Earn 100,000 bonus Qantas Points, 75 bonus Status Credits and $150 back when you spend $3,000 in the first 3 months with this premium card.
St.George Amplify Platinum - Qantas
60,000
Qantas Frequent Flyer
0.5
19.74% p.a.
$99
Earn 60,000 bonus Qantas Points, plus enjoy 0% p.a. on balance transfers for 6 months and complimentary insurance covers. Ends 30 Sept 2020.
Citi Rewards Card - $500 Voucher Offer
N/A
Citi Rewards Program
1
21.49% p.a.
$99 annual fee for the first year ($199 p.a. thereafter)
Get a $500 e-voucher to spend at Myer, JB Hi-Fi or Coles when you spend $3,000 in the first 90 days. Plus, earn points with the Citi Rewards Program.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
30,000
Velocity Frequent Flyer
0.66
20.74% p.a.
$64 annual fee for the first year ($129 p.a. thereafter)
Get 0% p.a. for 22 months on balance transfers and a reduced first-year annual fee. Plus, earn up to 30,000 bonus Velocity Points. Ends 30 Sept 2020.
Bank of Melbourne Amplify Platinum - Qantas
60,000
Qantas Frequent Flyer
0.5
19.74% p.a.
$99
Receive 60,000 bonus Qantas Points when you spend $2,000 within 90 days and earn up to 0.5 Qantas Points per $1 spent. Ends 30 Sept 2020.
Qantas Premier Platinum
80,000
Qantas Frequent Flyer
1
19.99% p.a.
$199 annual fee for the first year ($299 p.a. thereafter)
Get up to 80,000 bonus Qantas Points, 75 bonus Status Credits and a 0% p.a. balance transfer rate for 18 months. Ends 30 Sept 2020.
Coles Rewards Mastercard
N/A
flybuys
2
19.99% p.a.
$99
Earn 2 flybuys points / $1 spent and save with a 0% balance transfer offer. Plus, 0% international transaction fees on purchases.
HSBC Platinum Qantas Credit Card
20,000
Qantas Frequent Flyer
1
19.99% p.a.
$99
Receive 20,000 bonus Qantas Points and a long-term balance transfer offer. Plus, complimentary travel insurance. Ends 30 Sept 2020.
Westpac Altitude Platinum Qantas
60,000
Qantas Frequent Flyer
0.5
20.49% p.a.
$99 annual fee for the first year ($200 p.a. thereafter)
Get 60,000 bonus Qantas Points when you spend $3,000 within 90 days. Plus, a first-year annual fee discount and a long-term balance transfer offer.
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Credit Cards Comparison

Data indicated here is updated regularly
Name Product Purchase rate Balance transfer rate Annual fee
Skye Mastercard - Exclusive Offer
23.99% p.a.
0% p.a. for 25 months
$99
Finder Exclusive
Save with 0% p.a. on balance transfers for 25 months, up to 110 days interest-free on purchases and flexible instalment plan options.
ANZ Low Rate - Exclusive Offer
12.49% p.a.
0% p.a. for 25 months with 1.5% balance transfer fee
$0 annual fee for the first year ($58 p.a. thereafter)
Finder Exclusive
Save with 0% p.a. on balance transfers for 25 months (with a one-time 1.5% BT fee) and $0 first year annual fee. Ends 30 Sept 2020.
NAB Qantas Rewards Signature Card
19.99% p.a.
0% p.a. for 6 months with 2% balance transfer fee
$295 annual fee for the first year ($395 p.a. thereafter)
Collect up to 130,000 bonus Qantas Points. Get 100k when you spend $3,000 on eligible purchases in the first 60 days and 30k after 12 months.
ANZ Platinum Credit Card
0% for 17 months, reverts to 20.24% p.a.
20.24% p.a.
$0 annual fee for the first year ($87 p.a. thereafter)
Receive a 0% purchase rate offer for 17 months and a $0 first-year annual fee. Plus, complimentary overseas travel and medical insurance.
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* The credit card offers compared on this page are chosen from a range of credit cards finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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