Credit cards try and attract us with rewards schemes, but those often require large spending amounts and have tricky conditions. So which ones are worth considering — and which ones might actually cost you more than the rewards?
Credit card picture from Shutterstock
If you’ve seen the George Clooney film Up In The Airyou’ll know what I mean when I say that most of us love the idea of earning massive mounds of rewards points without questioning whether they are actually worth it.
For those who haven’t seen it, Clooney goes to extreme lengths to earn one million frequent flyer points, just because he can, and when he eventually does he has a sombre, mid-flight “so what” moment.
The same can be said about rewards credit cards. Contrary to the love affair Aussies have with them, these can actually end up costing us money each year when you weigh up the benefits against the annual fee.
Mozo.com.au recently analysed 119 rewards cards to find the best value programs and in the process discovered that a third of these cards offer the typical cardholder just $20 of net rewards value each year once you subtract the annual fee.
If that’s not enough to make you rethink the benefit of a wallet crammed with plastic rewards, spare a thought for the unlucky Aussies stuck with a card that charges a higher annual fee than can be earned in rewards each year.
One in four rewards cards actually have you in the red each year, unless you’re spending well above the average $17,000 a year.
Annual fees on rewards credit cards are on average nearly four times that of non-rewards cards, at $161 versus $43 each year. Interest rates differ greatly as well, with rewards cards charging 19.62% compared to non-rewards cards at 14.48%.
Before you throw away your rewards card altogether, note it’s not all bad news. Mozo’s researchers found 34 rewards cards that return more than $100 in net rewards value each year to the average spender, with the best card offering a net rewards value of $296.
Big spenders putting $60,000 a year on the plastic can earn up to $1,415 a year in net value.
So what are the top rewards cards picks on the net rewards value equation?
Best value rewards cards for average spenders ($17,000 a year)
- 1. American Express Velocity Escape: $296 net rewards value
- NAB Velocity Rewards Premium Card: $293 net rewards value
- American Express Qantas Discovery Card: $276 net rewards value
Best value rewards cards for big spenders ($60,000 a year)
- NAB Velocity Rewards Premium Card: $1415 net rewards value
- ANZ Rewards Platinum: $1242 net rewards value
- NAB Qantas Rewards Premium Card: $1213 net rewards value
The full results are available at Mozo here.
Kirsty Lamont is a director of Mozo.com.au which helps Australians compare and save on credit cards, home loans, insurance and other financial products. Kirsty was one of the launch team for Virgin Money when it started in Australia in 2003, and also held a senior role at BankWest before joining Mozo in 2007. A consumer finance expert, she has access to Mozo’s up-to-the-minute data about different financial products on offer.
Comments
15 responses to “What Are The Best Reward Credit Cards In Australia?”
What about amex charge cards? I was thinking of going for the platinum, is it worth it, I’d probably spend about $35.000 a year on it i guess.
If you’re talking a proper AMEX Platinum, you’re going to have to spend a lot to offset the $1,200 annual card fee. That said, you might be able to, since it’s got no credit limit, and a sign-on bonus of 80,000 frequent flyer points.
The problem with AMEX points cards is finding merchants who take them, without charging a surcharge.
I’m surprised the the Virgin High Flyer Visa didn’t rate a mention, since it earns 1.25 points per $1 (which is more than the AMEX reward cards earn rates), costs $300 per annum, and is accepted everywhere.
It’s much easier to rack up reward point on a card that’s accepted by merchants.
Yes that’s the one I meant.
You get a free flight anywhere in Australia and NZ once a year and 3 points per dollar which would give around 100.000 points pa
Ahh the devil is in the detail. It’s 3 points per dollar if you spend it on entertainment, but if you want to spend your money on everyday living, that drops back to 1 point per dollar or worse.
3 points for every $1 spent‡ Tens of thousands of restaurants in Australia±
Selected Qantas products and services in Australia~
2 points for every $1 spent‡ Accommodation, airlines, major cruise and tour operators paid directly or through travel agencies±
Spend in foreign currency when overseas and online±
1 point for every $1 spent‡ Insurances offered by American Express
All other providers, excluding those below
0.5 points for every $1 spent‡ Utilities, which are gas, water and electricity providers
Insurance offered by companies other than American Express
Telecommunications providers, which includes goods and services purchased from phone, mobile and internet service providers
Government bodies including the Australian Taxation Office, Australia Post, federal/state and local government bodies
People spend an average of $17,000 a year on their credit cards? WTF?
Easily put 60,000+ on the card last year. Not skiting about it, just put EVERYTHING on the card. It’s always paid off each fortnight so never pay interest. NB double-income no kids so earnings are ok.
That was in line with the way I interpreted WhitePointer’s comment. People only put $17,000 a year on their credit card?
Electricity Bills – $2000
Health Insurance – $3000
Food – $5000
Petrol $10000
That’s only a small portion of the average person’s costs, and you’re already at $20,000 without even thinking about many other expenses (water, land rates, entertainment, internet, mobile/home phone, etc).
If you’re Joe Hockey, you can add “rent at your wife’s rental property” – that’d be $1.2m if she accepts credit card 😉
Actually no, I was more gobsmacked that people on average put 17k a year on their credit card.
I have a credit card and only really use it if I really have to. It would only be a few grand a year at most.
Yeah, it’s just a difference in attitude. If people are optimising for rewards, then they’ll put everything on the credit card. Likewise, if they are optimising for payment of a home loan (for example) then charging everything to the credit card and then paying only when it comes due actually adds up in terms of interest saved (because there is money in your account for longer).
Mind you, I’m not that much of an optimiser and basically only use my CC for Paypal or online purchases.
I spend 300k on it ;-), I ve just bought a Breville Oracle with this year points
@WhitePointer, as long as you pay off your credit card every month, why not use it for every purchase and benefit from the rewards programs. It’s common to see people spending over $60k a year for people in the associated income bracket.
Amex Platinum Edge card has a free domestic flight each year. I find it good value, especially from WA.
I have one of these. Although I didnt get a chance to use the flight last year the fee of $150 a year easily offsets by that flight alone (as it includes checked baggage). People in WA get the best deal with flights to any major Eastern City; we only get to go to other Eastern Cities. You also get 3 points per dollar at Major Supermarkets and 2 points per dollar at major servos.
When they used to have Hoyts movie ticket books on their rewards program I used to get a 10 ticket book every 6 months or so which was awesome for someone who goes to the movies a lot. Disappointing they took them off.
Next time you dont see yourself using the free flight, opt for a free night at a major hotel chain. I think you used to be able to swap the flight for a free night at a hotel.
Hmm I’ll definitely look into that. Thanks!
Jeepers, Get on the credit card frequent flyer forums. There are always new credit card offers getting advertised.
Just recently I signed up to Citibank $299 annual fee with 80,000 QFF bonus points. It’s also Visa Card 1pt per $1.
Also just signed up to ANZ with no annual fee and 50,000 sign on points (just have to spend $1500 in the first 3 months)
So without sneezing I’ve got a 1 way business class flight to Europe (excluding taxes of course)
Your best bang for buck is with the signup deals, the on going purchases are just a bit of cream on the top.
You might want to be careful about doing this. Every time you sign up for a credit card it goes on your credit report. The more credit cards you sign up for (even if you cancel them as you go) the worse you look to banks/lenders.
What if you put close to $2mil a year through a card? We pay a monthly wholesale invoice of $150K…whats the best travel option in that case?
There is a decent grace period on the offer expiry every year. I cashed in on my previous and current years flights to take my wife to Melbourne.