The premise is golden: spend on your credit card and earn frequent flier miles as you go! But are these reward cards really worth the effort?
 
The answer, it seems, depends on how much you spend on your card, and how you manage your accounts.
 
“Travel rewards credit cards allow you to earn points towards flights and holidays as you spend, but if you choose the wrong one, you may find the experience far from rewarding,” says Brendan Mays from consumer watchdog Choice.com.au.
 
According to Choice, you need to spend at least $2,000 in purchases per month on a rewards credit card to generate any positive return, once you take into account the annual fee.
 
But this doesn’t factor in the interest payable on your purchases: if you don’t pay off your entire credit card balance in full each month, then there’s a very good chance that your frequent flier card won’t be doing you any favours at all.
 
Choice looked at 63 cards in total, with each offering either their own dedicate travel rewards program, or a link to an airline’s frequent traveller program.
 
Their research found that those who spend a decent amount every much – that is, at least several thousand dollars – clearly stand to gain the most.
 
“We sized up the major card loyalty programs and found that on average, spending around $1,000 a month on your card will cost more in fees than you earn in rewards,” Mays says.
 
However, there are additional factors to keep in mind. For instance, you often have to use your Amex to earn the most points. With some Qantas-linked Frequent Flier cards, you only earn 1 point per $2 spent on the Visa, or but you earn 1 point per $1.50 spent on your Amex.
 
The extra points generated on the Amex are a bonus, but some retailers charge up to 2% to use an Amex. So, you’ll need to figure out whether the costs of using the card outweigh the benefits you receive in frequent flier points. It’s almost too complicated to calculate!
 
“There are some good-value products available,” Mays clarifies, “but you must choose carefully and pay the balance in full each month.”
 
He adds, “If you can’t pay your balance in full each month, our advice is to forget about rewards cards altogether and opt for a no-frills, low-interest credit card instead.”
 
 
 
 
 

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