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Credit cards that reward spending

Information verified correct on December 10th, 2016

Want more from your credit card? A credit card that rewards spending through a reward scheme enabled you to receive more value from purchases and benefits

Different credit cards offer different reward schemes that encourage you to spend more. Reward cards may offer you bonus points for each purchase allowing you to accumulate flyer reward points that can be redeemable for flight perks or even give you back a percentage of your total spending as cash-back at stores.

All cards that reward spending are specifically designed to reward you for using that card, be it while booking a flight, shopping in stores, dining or making hotel reservations. With a reward card that offers a reward scheme that suits your spending needs, you can accumulate reward points faster and get more value from every dollar you spend. However, you have to ensure that the rewards you get from your card are enough to offset other costs associated with it such as annual fees.

What is a credit card that rewards spending?

Credit cards that reward spending are designed to give you points that you can redeem for travel costs, merchandise, gift cards, electronics and more. Different rewards cards will offer varying forms of perks and features depending on the reward scheme attached to them. For instance, some cards will be linked to a frequent flyer reward scheme that lets you earn points every time you book a flight with your card. Whereas others will allow you to earn points that can be redeemed for merchandise discounts at selected stores.

Some cards will reward you with more points when you spend more cash, while others give you points for signing up or applying for them. As lucrative as they may seem, credit cards with rewards are complex and are often better suited to frequent spenders. The type of reward program on the card will also determine what type of person it is most appropriate for.

How am I rewarded for spending?

Most credit cards that reward spending come attached to some form of rewards program, be it a frequent flyer reward scheme like Qantas or a supermarket card like Coles. These cards all work in the same way, allowing you to accumulate reward points whenever you use the card. Some cards will allow you to accumulate points faster depending on the points value and amount, while others will reward you for shopping at selected retail stores or booking flights with certain associated airlines.

Finding out how many points you are getting for each dollar spent is the key, as it helps you determine if the rewards will be enough to offset the annual fees on the card and any other additional fees that cover the reward program. In order to get the most from these types of credit cards, you need to determine the reward program that is most valuable to you, be it a flyer reward program or a reward program with a cashback reward, and then go for that type of card. You also need to know how much you will need to spend before you get reward points and budget accordingly.

What are the types of credit cards that reward my spending?

Each reward card is designed to reward a certain spending habit, such as frequent flyers, shoppers in supermarkets and petrol stations - so be sure to get one that gives the rewards you want depending on your unique spending habits.

  • Platinum cards. These cards offer exclusive travel perks that are not included on other standard cards. Customers get rewarded with perks such as superior complimentary travel insurance and emergency insurance while on local and international flights, access to exclusive airline lounges and gift vouchers for hotels and restaurants.

Platinum Credit Cards

  • Cashback credit cards. If you want a card that will reward you with gift cards and cash for spending, a cashback credit card might be for you. These types of cards can either allow you to accumulate points that can later be redeemed for cash or give you a certain percentage of your total monthly spending in cash. Frequent shoppers stand to benefit most from such cards.

Cashback Credit Cards

  • Petrol credit cards. As the name suggests, these cards reward you with points for fueling your car at selected petrol stations within the country. Most such cards carry a reward scheme jointly hosted by a certain fuel company and your credit card issuer, meant to reward you for using your card at the pump. With the reward points you accumulate, you can receive fuel vouchers or discounts from fuel retailers.

Petrol Credit Cards

  • Frequent flyer credit cards. Designed to reward frequent flying, these types of cards usually carry a frequent flyer reward program, such as Qantas or Velocity, which allows customers to earn points whenever they make flight bookings on associated airline companies using their cards. Such points are then redeemable for priority check-ins at airports, flight discounts, additional flight miles and flight upgrades.

Frequent Flyer Credit Cards

  • Rewards credit cards. These cards reward spending on certain transactions, especially for merchandise purchases at leading stores. Each time a customer uses their card at specific outlets, they earn a certain number of points usually determined by how much they spend. These points can then be used to get preferential treatment at exclusive stores or to claim discounts on high end merchandise at leading stores. Points earned on purchases can also be used to offset annual fees on the card.

Rewards Credit Cards

  • Bonus points credit cards.These cards are often rolled out by banks as a way to encourage new customers to apply for credit cards. New card members can earn higher points for purchases in the first year or so, points that can offset annual fees on the card.

Credit Cards with Bonus Points

What are the pros and cons of these credit cards?

Pros

  • Additional perks. Other than the standard features found on normal credit cards, credit cards that reward spending will have extra perks designed to make spending more fun and lucrative. Such bonuses may include superior travel insurance, gift vouchers, access to VIP treatment at stores and airports and a chance to earn points on more transactions.
  • Bonus points. To encourage more spending, credit cards that reward spending often offer bonus points that cannot be earned while using standard cards. These bonus points make it possible to accumulate points faster so as to earn enough rewards to offset annual fees on the card and get more gift items and retailer deals.
  • Reward points. The main reason for getting one of these credit cards is to get rewarded for spending. Credit cards that reward spending make it easy for you to earn reward points by having a reward scheme that is either hosted by the card issuer or by a frequent flyer reward program.

Cons

  • Higher annual fees. These cards usually have higher annual fees than standard cards. Some cards may also charge additional fees for membership to the reward program.
  • Reward limitations. Some cards have reward point caps that punish big spenders.
  • Points caps and expiry. Some rewards credit cards pose a points cap or expiry which can limit the potential use of your points.

Things to avoid and to keep in mind

While getting a credit card that rewards spending, it is important to read through the terms and conditions to see if the interest rates on purchases are very high. High interest rates would offset the benefits of your reward points and leave you with high credit card debt. Complicated points redemption procedures are also a possible pitfall with some reward cards, so be sure to get a card that has a straightforward redemption method with no delays and multiple redemption options.

It is also important to note that these cards only reward you if you pay your card balance in full monthly. Otherwise, the interest on purchases and penalties for late payments would overshadow the freebies you get from the card. Also, ensure that there is no cap on the amount of points you can earn on the card you pick especially if you are a big spender, as this would deter you from earning maximum points.

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Frequently asked questions

What is the eligibility criteria for one of these credit cards?

The specific eligibility will depend on the issuer, but generally, you will need to be over the age of 18, be a permanent Australian resident and have a good credit rating. You may also need to meet a minimum income requirement.

Can I convert my points into points with another rewards scheme or issuer?

This will depend on your rewards program issuer and whether you're using a direct or indirect earn card. Some rewards programs don’t allow members to directly convert their points for points with another system. However, some options, such as Qantas Frequently Flyer or Virgin Velocity, allow cardholders to earn and redeem points with partnered airlines and organisations. Read the terms and conditions or contact your rewards program directly to confirm where else you can earn and use your points.

How many points will I need for a particular reward?

As a financial comparison service, not a rewards program or airline, we cannot confirm how many points you'll need for certain flights or rewards.

The amount of points you’ll need will depend on your issuer, the product and the details of the flight. In terms of flights, most frequent flyer programs have a points calculator available on their website. If you enter your preferred route and ticket status, the calculator can determine how many points you’ll need to cover the flight.

In regards to other types of rewards, most programs have an online catalogue that’ll allow you to browse the rewards on offer and how many points you’ll need to redeem a certain product or service

Which rewards card is right for me?

There is no such thing as the one ideal credit card. The right credit card for you will depend entirely on your own financial situation as well as what you want and need out of a credit card. Compare the credit card options available with your financial situation, and make sure to calculate whether the rewards you'll receive will outweigh the costs of the card.

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