The Monthly Scoop: April Rewards UpdateThe best value for rewards points is flights. For instance, I was able to fly my family of five to Sydney using just Qantas points before Christmas.
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An easy but complete guide to rewards credit cards
Rewards credit cards earn points for your everyday spending. You can redeem your points on a variety of perks and freebies, from flights and accommodation to merchandise and gift cards.
In this guide, we’re going to explain how reward cards work and how to earn the most points from them.
⚡ Quick guide to rewards cards:
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How do you earn points?
Earning points is as easy as using your card for everyday transactions. If you’re super-savvy, you can use your card for expensive purchases – for example, a flat screen tv or a new couch – and pay it off immediately just for the points.
Every card will have a different ‘earn rate’, which is the number of points you receive for every dollar you spend.
Some reward cards will also come with bonus points (which could be as high as 200,000 points) that you can earn when you sign up as a new customer. Just be aware you may need to spend a certain amount on your card to unlock the bonus points.
What’s the best rewards card?
Honestly, the best rewards card is one that earns enough points to make you the winner at the end of the day.
Rewards cards aren’t for everyone, especially if you don’t usually pay off your card each month. Paying interest really eats into the value of your points!
Here are a few things to think about:
💡 Your income. Many rewards cards need a reasonable income because they’re a higher-tier card.
💡 How much you spend. You need to be a reasonable spender to earn enough to make a rewards card worthwhile after paying for annual fees. But, you don’t want to risk overspending and paying interest. It’s a balancing act.
💡 Where you want to redeem your points. Knowing how you want to spend your points helps you pinpoint the best card for you. For instance, do you want deals on supermarket shopping, flights or travel perks?
Next, let’s look at the different types of programs you can redeem points with. It will help you decide what kind of rewards card you’d like.
What programs can you earn reward points with?
Airlines and credit card providers all have unique programs. That means you can choose which program will give you the most benefits; for instance, frequent travellers might like to earn Qantas Points, while everyday shoppers might prefer Flybuys or ANZ Rewards.
Here's a snapshot of the different rewards programs available in Australia.
Airline programs that use frequent flyer points:
- Qantas Frequent Flyer. You'll earn Qantas Points that have the most value when used for flight upgrades and flights, although you can also redeem points for hundreds of retail items, the Qantas Wine club and gift cards through the online Qantas Marketplace.
- Velocity Frequent Flyer. Velocity is Virgin's loyalty program and points can be redeemed for flights and upgrades, car hire and hotel bookings, plus products and gift cards.
Financial institutions that use rewards points:
- Amex Membership Rewards. Amex's loyalty program is an all-rounder that redeems points for entertainment and unique member experiences, shopping and even travel through Amex Travel Online.
- Flybuys. You can earn Flybuys by signing up for free, and double-dip with a credit card that earns Flybuy points. Flybuys can be redeemed at Coles supermarkets for items or money off your shopping, spent at partnering stores or converted into Velocity Frequent Flyer points.
- NAB Rewards. Earn bonus points at participating brands (including dining) and NAB's exclusive Boosted Offers. NAB Rewards can be used for gift cards, cashback, shopping, entertainment and more.
- ANZ Rewards. ANZ gives you the option of redeeming points for retail products, gift vouchers, entertainment and travel. You can transfer points to the Velocity, Singapore Airlines Krisflyer or Air New Zealand frequent flyer programs.
- Bankwest More Rewards. Bankwest's loyalty program gives you the option of redeeming points for cashback, so you can spend your money however you like. Or, you can redeem points for experiences, shopping and gift cards.
- St.George Amplify. Amplify Points can be redeemed within the St.George rewards portal for goodies like shopping, gift vouchers and entertainment.
- Bank of Melbourne Amplify. Use your points for gift cards, shopping, and charitable donations. You can also redeem them for frequent flyer points with Virgin Australia and Singapore airlines.
- HSBC Rewards Plus. Rewards Plus points can be redeemed as cashback on your credit card, turned into gift vouchers or used for travel. HSBC Rewards Plus points can be converted into Velocity points for flights and upgrades.
- Westpac Altitude. From gift cards and cashback to partner airlines, Westpac Altitude Points give you plenty of ways to redeem your points. Altitude Reward points can be used with partnering frequent flyer programs such as Velocity, Kathay Pacific and Singapore Airlines Krisflyer.
- Citi Rewards. Use cashback to purchase items for free, or use your Citi Rewards points to Pay With Points at partner brands such as Kogan and Apple. Citi Rewards points can also be redeemed for Flybuys.
- Commbank Awards. These points can be redeemed directly with Myer and Flight Centre, or online for gift cards, cashback, electronics and travel. You can also redeem them for Qantas and Velocity frequent flyer points, plus other airline loyalty programs.
Comparing rewards cards to find the right one
We try to make it as easy as possible to compare cards, but you’ll need to know a few basics first. Think about these factors when you’re comparing rewards cards.
What’s the annual fee? Remember I said you’ll need to make sure you’re winning in the end? You have to weigh up the cost of the annual fee against the value of your redeemed points each year. Let’s look at a couple of examples.
| Let’s say Laura has a rewards card with a $450 annual fee. Each year she earns 8,000 rewards points, which turns into 1 free flight from Sydney to Melbourne, valued at $200. ❌ Laura is paying too much in annual fees for the amount she’s earning in points. |
| Now let’s say Dane has a rewards card with a $295 fee. He earns 24,000 points each year and redeems them for flights too, valued at $650.✔ Dane is getting value from his card because he earns more in points than he pays in fees. |
How many points per $1? Cards that earn more points per $1 often have higher annual fees. Remember that all programs have different values; so, for instance, 1 Qantas Point has a different dollar value than an ANZ Rewards point or a Velocity Point.
Some cards will earn different points for different items, too. You might earn 1 point for everyday spending, and 0.5 points on government payments, for example.
Is there a cap on points you can earn? Some cards only let you earn points up to a certain amount (100,000 points in a year, for example). Or, you might earn less after you spend a certain amount per month (0.5 points per $1 instead of 1 point after you’ve spent $10,000 that month, for example).
What program will give you the best stuff? Look through the list of programs above and decide what you would like to spend your points on. That way, you can compare cards with similar programs.
What extra features does the card have? The amount of features is tied in with the annual fee; the pricier the card, the better the perks. Here’s what you can look for and compare:
- Free travel insurance: some providers offer complimentary travel insurance for rewards card holders (always check the terms to make sure it’s right for your trip)
- Interest-free balance transfers: you won’t pay interest on an amount you transfer from another credit card or personal loan (for some cards). It’s a neat way to help pay off debt.
- Extra deals: Some rewards cards have discounts on music, fashion, event tickets, travel, dining and movies.
What’s the interest rate? You’ll get the most out of your rewards card if you pay it off each month and never pay interest on it. But, if you do carry a balance it’s important to choose a card with the lowest interest rate possible.
How do you redeem your points?
This is the fun part. Depending on the program, you can use your points for:
- Travel: one of the best perks is discounted – or even free – travel and holiday purchases. You can book accommodation, flights, rental cars, tours and cruises to pretty much anywhere in the world.
- Retail merchandise: use your points for everyday items at retail stores. Think clothing, homewares, technology and beauty products.
- Gift cards: some rewards cards allow you to redeem points as gift cards, which gives you the flexibility of using the cash wherever you like (or give it as a gift).
- Cashback: you might be able to spend your points as money, which can take the form of cash in your pocket, a credit on your rewards card, or a payment towards your annual fee.
To redeem your points, you can:
- Use the provider’s online rewards store to buy products or gift cards
- Pay with your points at selected retails stores (and fill in any gaps with cash, called Points + Pay)
- Use an eligible travel agency or shop direct with airlines like Qantas and Jetstar
Here’s a step-by-step for redeeming your points online:
- Check how many points you have to spend. You’ll usually be able to do this through your credit card app or online portal. You’ll need to use the airline website to redeem Qantas or Velocity points, or points through partner airlines.
- Check out your reward options. Browse your card’s online marketplace or the airlines website for items you can redeem your points on. You’ll often have options to use points to cover the cost, or use Points + Pay to cover the remainder with cash.
- Choose it and click submit. When you’ve found what you’re looking for, just hit the redeem button. Then it’s a matter of waiting for the order to arrive.
What purchases won’t earn points?
Ooh, this is where that tricky phrase ‘eligible transactions’ pops up. Not everything you buy earns points, and you’ll only find the list of ineligible transactions in the card’s terms and conditions.
Here’s what most rewards cards won’t give you points for:
- Cash advances. A cash advance is a withdrawal of money from your credit card, and it attracts immediate interest, but no rewards.
- Balance transfers. Popping your debt from a credit card onto your rewards card won’t earn any points.
- BPAY payments. Online BPAY payments don’t count towards point earnings either, unfortunately.
- Government payments. Most rewards cards won’t accrue points by making payments to the ATO, although a very small selection do. You’ll need to check the rewards program and the small print.
From our expert: How to get the most out of your reward card“Use your card to earn points everywhere you can, but never spend more than you can afford. Pay off your card every month to avoid paying interest, or you’ll diminish the value of your awesome rewards points.” -- Pauline Hatch, chief finance expert |
Frequently asked questions about rewards cards
❔ How much do I need to earn for a rewards card?
All cards have different income requirements, and many credit card providers don’t give a figure anymore. It’s safe to say that a premium card - which might cost $300 to $450 per year will have a higher income requirement. For instance, you might need to earn around $75,000 per year.
❔ Can I do a balance transfer on a rewards card?
Yes, some rewards cards have balance transfer options. Some might even have special offers that mean you won’t pay interest during a promotional period. You can also look at our balance transfer comparison guide.
❔ I’m seeing the words ‘platinum’ and ‘premier’ everywhere. What does that mean?
Those words mean the card is considered a higher-tiered card and comes with more extras (and likely a higher annual fee). Let’s take a quick look at each.
Standard rewards cards. These cards won’t have words like platinum or premier in the title and may not earn as much per $1 as higher-tier cards. They also may have fewer features and perks.
Platinum rewards cards. You may earn more per $1 and earn bonus points on certain products or government spending. These cards are more likely to come with travel insurance, concierge services, and waived international transaction fees.
Diamond or ‘super premium’ rewards cards. These are the highest-tier cards and are more rare. They often come with exclusive, executive-style perks and travel features. The annual fee and the income requirement will be high.
❔ I want the maths on rewards point values. How do I calculate it?
Working out the value of a reward point isn’t straightforward. The value can change depending on how it’s redeemed; for instance, you’ll get the most value out of flights and upgrades for Qantas Points compared to a gift card or cashback.
But, you can use a pretty simple trick to work out the value of points:
Find the standard retail price of the flight or item and divide it by the number of points it costs. For example:
A VR headset costs $395 in-store or 12,000 points through your rewards program. So, divide the number of points by the value:
12000/395 = 31 points per $1
You can do this calculation for points in a different reward program when you know the number of points needed to redeem the same reward and the price.
❔ Can I earn points using BPAY?
Not usually. You’ll need to check the eligible transactions list in the card’s terms and conditions.
❔ Do rewards points expire?
The expiration of your rewards points depends entirely on the provider. Some offer no expiry date on points, some lapse unless you redeem at least some points within a certain timeframe, and others will disappear entirely if there’s no action on your account.
Check your provider’s expiry policy so you don’t lose your hard-earned rewards if you leave your account dormant.
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