Want to know how much your credit card rewards points are really worth? Find out more about different point values and compare rewards programs here.
Rewards programs earn you points for every $1 you spend on your credit card. These points can then be redeemed for a wide range of products and services including flights, gift cards, cashback and shopping. While these rewards are designed to add value to the credit card that you choose, costs such as interest rates and annual fees can outweigh the benefits they provide.
Rewards Program Credit Cards Comparison
How much are my rewards points worth?
The value of rewards points depends on a variety of factors, including the rewards program and the way you redeem your points. For example, a rewards program might offer a $50 gift card for 11,000 points and a $100 gift card for 20,000 points – meaning you would get more value from your points when redeeming the $100 gift card.
On the other hand, another rewards program might offer the same type of $100 gift card for 13,500 points. Other types of rewards may also offer greater or lesser value when you look at the points required versus the retail cost of the reward. As well as these factors, you should consider the amount of points you earn per $1 spent, any fees or interest charges that you've had to pay and the availability of rewards.
Put simply, it's extremely hard to calculate the exact value of rewards points because there are so many variables. Instead, it's worth weighing up your options before you choose a card, and comparing rewards to decide what offers you the most value based on your goals.
How to compare rewards programs
There are a number of other elements you need to consider when you compare different rewards programs and credit cards. So keeping the following key points in mind will help you choose an option that suits your needs:
- Earn rate. The more points you earn per $1 spent, the faster you will be able to make a redemption and the greater value you will get from the rewards program. For example, a credit card that offers 0.5 Qantas points per $1 will require double the amount of spending to get a redemption when compared to one that earns 1 point per $1.
- Points expiry. Some rewards programs require you to use points within a set amount of time, such as 12-24 months. If you don’t use them in that time, they will expire and you won’t get any value from them.
- Points capping. Depending on the rewards program and credit card you choose, you may only be able to earn a certain amount of points within a month or year. You can work out if a points cap will affect you by comparing your average spending to the points you will earn. If it’s more than the cap, then you may want to consider other options.
- Membership fees. Some rewards programs charge a registration fee, such as the Qantas Frequent Flyer Program, which has a one-off joining cost of $99.50. Make sure you factor this into the cost of the rewards program or try to find a credit card that waives it.
- Annual fees. Rewards credit cards have annual fees ranging from $49 to $450 or more. It’s important to weigh this cost up against the potential rewards you earn to make sure you get value out of the card you choose.
- Interest rates. Rewards credit cards often have high interest rates that will apply if you carry a balance. These charges take value away from the rewards that you earn, so aim to pay off your card in full for each statement period.
- Other fees. Credit cards have a range of other charges that apply in certain situations, including international transaction fees, late payment and over limit penalties and charges for opting into a particular rewards program.
Rewards programs offer a wide range of benefits for members, with gift cards and flights just two of the popular redemption options. Now that you know how to compare the value of these points against different rewards and program features, you will be able to choose a credit card and a rewards option that suits your needs.
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