How to fly for free with rewards cards

Graham Cooke 7 November 2016

It's now possible to earn frequent flyer points on every transaction you make. Here's how.

Keen point-hackers have been using rewards credit cards to clock up frequent flyer miles for years. There have traditionally been two drawbacks to doing this.

First, rewards credit cards can be quite pricey. The average annual fee across the market currently stands at $268. Secondly, many retailers do not accept rewards cards, or they discourage their use by charging an extra processing fee.

The number of debit cards in circulation in Australia has soared along with EFTOPS and payWave technology. It’s therefore possible to pay for almost every transaction electronically, and by combining two cards currently available on the Australian market, it’s also possible to clock up free frequent flyer points with every transaction.

Rewards credit cards have been around for a long time. The traditional setup is that the user pays an annual fee of some sort and in turn receives benefits for card use, often in the form of airline rewards points. There are many free credit cards on the market, but up until recently none of these offered a realistic points-per-dollar rewards program. The American Express Qantas Discovery and Velocity Escape cards solve this problem. Both are available for a $0 annual fee, offer 7,500 bonus sign-up points and award one frequent flyer point per dollar spent.

comparison of frequent flyer cards with no annual fee

It's now possible to clock up frequent flyer points on debit card transactions as well. The $0 annual fee Qantas Cash and Velocity Global Wallet cards are traditionally designed for those travelling overseas. If you load these cards with foreign currency, you can use them to pay for overseas transactions and earn one frequent flyer point per dollar, while avoiding the additional 3% credit card fee on foreign transactions.

However, you can also use both of these cards in Australia and load them up with Australian dollars. The earning rate is halved (one point for every $2 spent) and it does require you to pre-load the card account with funds, but it means you can still earn frequent flyer points where American Express is not accepted or where extra fees are charged.

Using a combination of these cards, it’s possible to earn points on every transaction you make. A return flight from Sydney to Melbourne or Brisbane will cost you 16,000 points (plus a little more if you also want to cover the taxes, etc). Presuming you can use your Amex card for two-thirds of your transactions and your Cash card for the rest, this means you’d need to spend just north of $11,000 to earn enough points for a return flight, taking into account the sign-up bonus. If you spend $400 per week, it would take just over six months to clock up your first flight. From there, you can clock up roughly one free flight every year with this method.

There’s also extra value to be had if you use your points for flight upgrades rather than outright bookings, as discussed in my previous blog post. While this might seem like a lot of effort to got to to get one free return flight, bear in mind that all flights between these cities cost the same number of frequent flyer points regardless of the dollar price, so you can get better value by booking more convenient flights at high-demand times, such as Friday evenings. Best of all, there’s no additional cost.

For more information about rewards cards, check out our detailed comparison.

Graham Cooke's Insights Blog examines issues affecting the Australian consumer. It appears regularly on finder.com.au.

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