Are credit cards really getting worse? Kind of!
Many credit card deals aren't as lucrative as they used to be, but a good credit card still offers a ton of value when paired with the right strategy.
I've been writing about Australian credit cards for years and there's one thing I've noticed lately: these card offers aren't what they used to be.
Credit cards are offering fewer benefits, shorter balance transfer windows and tighter conditions on bonus points offers.
It's tough out there for points hunters and debt-stricken balance transfer customers.
Now there's plenty of great offers on the market. I love my credit card (although you can't get it right now as there's a pause on new applications!).
But you have to work a lot harder to make your credit card shine.
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Balance transfer periods halved
Even just a year ago there were plenty of cards like the St.George Vertigo that offered 0% for 24 months with a one-off balance transfer fee.
Today it charges 6.99% for 36 months with no balance transfer fee. The long 36-month offer and lack of balance transfer fee is nice.
But if you're trying to pay off a substantial balance, those interest charges will add up. A balance of $5,000 over 36 months with a 6.99% interest rate would cost you over $500 in interest.
Today, some of Finder's highest scoring balance transfer cards give you just 12 months at 0%. It's a massive downward shift in the balance transfer market.
Thankfully there are still a couple of credit cards that have 0% balance transfer offers for 24 months. And the ANZ Low Rate card gives you 0% for 26 months with a 3% balance transfer fee.
Points hunters jumping through hoops
For anyone earning points on their card the whole landscape has gotten more challenging.
Some of the top Velocity cards like Virgin Money's best cards have been taken off the market for now.
Most of the big bonus points offers require you to hold the card for over 12 months.
This means a longer wait. And you have to pay the annual fee twice.
Bonus points offers are now limited to new customers who haven't had a card for 24 months instead of 18.
This makes it even harder for people to jump quickly between credit cards.
(In)frequent flyer reward flights
And even once you manage to earn a bunch of points, it's harder to redeem them for flights.
Earlier this year Qantas made changes to its frequent flyer program. There are more reward flights on offer, but most of them require more points.
In effect this reduces the value of Qantas Points.
Fewer interest-free days
55 days used to be the standard number of interest-free days you could get on a credit card.
And while this is still standard for many credit cards, in the last year or so we've started to see more cards drop from 55 to 44 days.
It's small changes like this that are slowly making credit cards less beneficial than they used to be.
Savvy card users need a strategy
Credit cards are still really popular in Australia. They've had a big comeback in recent years.
I still think credit cards are worth it. But Aussies have to work a lot harder to get the most value out of their cards.
Maximise your spending with the right card and take advantage of special offers when they come up.
How I maximise my points when I shop
I mainly shop at Coles with a credit card that earns me 1 Velocity Point per dollar. And I earn Flybuys on top of that.
I'm also a Coles Plus Saver member. That means I get double Flybuys Points for $7 a month (plus a 10% discount on one shop a month that pays for the membership very easily).
2 Flybuys Points equals 1 Velocity Point. So If I spend $500 at Coles in a month I end up with 1000 Velocity Points. That's before taking advantage of any bonus Flybuys offers.
This is a simple but effective way to maximise points. Qantas Points collectors can do something similar when they shop at Woolworths.
And make sure you minimise your annual fee costs. Some of the best cards offset the annual fee with a travel credit.
Use it and you neutralise that fee. But if you don't, you've missed out on a major saving.
And if you're redeeming points for reward flights, make sure you book well in advance. It's much harder now to get the really cheap fares, so plan ahead.
Credit cards are still worth it. They just require a bit more work.
Compare all your credit card options at Finder and find a card that really works for you.
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