Guide to frequent flyer credit cards
When it comes to choosing a frequent flyer credit card there are plenty of options to consider. Flights, travel and merchandise options for redeeming your points, programs with different retail partners and points earning and extras like free travel insurance, membership to the frequent flyer program are all available. Other perks like entry into an airline lounge or bonus points are also added to the mix. When it comes time to choose a frequent flyer card, it can be hard to sift through all your options. We’ve prepared a little something to help the process though, and show you what sorts of questions you should be asking yourself before committing to a card.
Should you get a frequent flyer card?
Whether or not you should be getting a frequent flyer card, instead of a rewards card is the first question to ask yourself. Frequent flyer cards allow you to collect points specifically for flying (though there are usually lots of merchandise options too) whereas a Reward card may offer a broader range of things to redeem points for, and other features.
There are rewards cards that come with pretty low annual fees around $90 or less, so think realistically about how soon you will rack up air miles on a frequent flyer card.
Consider the points you earn per $1 spend and think about where you’re really likely to shop frequently and spend money with the card. Whether it’s a frequent flyer card or another type of rewards credit card, bonus partners and special offers will make a difference to how quickly you earn enough points to justify the annual fee.
After you’ve thought about your other options, and you’re sure you are after a frequent flyer credit card, ask yourself the following simple questions to help decide between cards.
How much do you earn?
Frequent flyer credit cards are naturally designed for people who:
- Earning a full time income,
- Who will use their credit card regularly, and
- Are sure to pay off the balance each month in mind
Whether you earn $35,000 or $100,000 per year will make a difference to how much you can benefit from a frequent flyer card, because it makes a difference to how much you can spend on the card to earn points.
How much will you spend?
Putting one bill of $100 or so per month on the card won’t see your points balance go up very far by the end of the year. If, on the other hand, you pay the household bills, do the grocery shopping and visit the shops often, and know you will spend at least $1,500-$2,000 per month using the card that way, before earning points from bonus partners, then a frequent flyer card will return value for your money spent.
Will you make payments on time?
If you want to reap the benefits of a frequent flyer card, and make your points worth something, it’s important to make sure you pay your balance on time every month. That means scheduling payments for a couple of days before the due date on your statement, or the same day if your transaction account and credit card are with the same bank (with instant transfers).
Making payments on time is essential because each late payment attracts a charge, which ranges between about $10 and $25 dollars, and can be higher in some cases (check the fees for any individual card you’re interested in).
This is the challenge with spending lots of money on your credit card, and why the banks offer rewards in return for using them! If you end up paying lots of charges you may be better off buying flights outright rather than trying to save up points for them.
Not only will you have the fee tacked on to your next monthly statement, it may be added to the balance accruing interest. This will also impact your credit file, and from March 2014 any potential lender will be able to see your full repayment history on credit cards and loans for the previous 24 months – so two whole years of your repayment history. This certainly can have an impact on whether they decide to give you a credit contract.
Annual fee vs. points earned?
This topic has been in the media a fair bit already, but it’s seriously worth weighing up the cost of the card’s annual fee and the number of points you will likely earn. Many frequent flyer cards come with high annual fees, and this does include some consideration for the free insurances you get with the card as well as compensation for the rewards program you will be participating in. So, the question to ask is, will you use the card’s extra features and earn enough points to justify paying $100 or more in an annual fee? This is really similar to asking whether you will spend enough on the card to earn points that actually get you somewhere. It can be done, and many people do fly often, get free upgrades and baggage allowance and much more thanks to their carefully earned frequent flyer points, but it takes some forethought and planning.
What do the banks get out of it?
The answer to this question, in one word, is customers. When you sign up for a credit card with any bank, they know they have your business. They have your details, and can market other products they offer to you (insurance, savings accounts, loans, home loans and wealth management advice to name a few). Money the banks spend on administering rewards programs, and in the case of frequent flyer cards purchasing the points from the relevant airlines, is easily recouped by the annual fees and admin charges (such as membership to the frequent flyer program) as well as interest charges that are passed on to all credit card customers.
What do the airlines get out of it?
American Airlines figured out way back in 1981 that it would be more cost effective and beneficial to reward customer loyalty with ‘a mile earned for a mile flown’ than to continually focus on attracting brand new customers, so the first frequent flyer program came about that way. Car rental companies, hotels and retail chains all joined the party and the banks entered into similar partnerships with various airline rewards programs. These partnerships prove mutually beneficial for the airlines and banks or other partners, and so they continue and in fact more partnerships continue to form all the time. The airlines have an interest in retaining customers while partners have an interest in getting loyal customers as well.
Free flyer program memberships
The first obvious requirement when it comes to earning frequent flyer points is that you have to be a member of a relevant frequent flyer program, i.e Qantas Frequent Flyer, Virgin Velocity Flyer or Emirates Skywards, for example. This can save you $89.50 if you need to become a Qantas Frequent Flyer but you’ll probably find you’ll be paying a high platinum card annual fee for your credit card.
What costs are involved in joining frequent flyer programs?
Velocity membership costs $20 if you join via the Virgin call centre, but via the website it’s free – so online is the way to go if you need to join up.
Qantas Frequent Flyer membership will set you back a one-off fee of $89.50, but if you’re already an Everyday Rewards member (through Woolworths) and join that way using the ‘link my membership’ function of the website membership is then free.
Emirates Skywards membership is free and can be applied for via the website.
Singapore Airlines Kris Flyer membership is free and can be applied for via the website.
How to redeem points?
Redeeming points for flights:
Redeeming points for flights is usually done through the airline’s online booking system.
Redeeming points for merchandise:
Redeeming points for merchandise or other rewards is often just a simple matter of logging on to the frequent flyer program website, using your membership details and choosing what you want to redeem your points for. You can generally browse the online gift shop for items and points value.
How to use a Frequent Flyer Credit Card
Getting more out of a frequent flyer credit card is about understanding what to do with the card and what not to do with the card. This means knowing when your statement period ends, and when you have to have your full balance paid to avoid interest charges. On top of that, there are some ‘dos’ and ‘don’ts’ – a lot more ‘dos’ since one of the biggest mistakes you can make is keeping a frequent flyer credit card that you don’t use often enough.
- Pay for all eligible purchases using your frequent flyer card;
This really comes down to carrying the card with you, thinking about using it for online purchases etc. and making sure that you do.
- Choose a card that lets you earn bonus points when spending,
As an example; your regular grocery shop may be one of the biggest expenses you have, so it’s made that much less painful if you can earn frequent flyer or rewards points when you do it. Apply this principle to all big spends and maximise points earning.
- Consider the reward program partner retailers: Do you shop there? Would you start shopping there for points?
If you don’t use the card in those places, you may benefit more from a different type of rewards card or you may want to change where you do some of your shopping. Shopping effectively with bonus partners is pretty much the number one ‘top tip’ or secret to success with frequent flyer members. Find the deals, understand the offers and use them as much as possible.
- Schedule your monthly repayments before the payment due date – or set up Direct Debit/Autopay
This will help you avoid late fees, make sure you don’t miss a payment and ensure your balance is cleared each month. If you’re spending lots on the card each month this is obviously particularly important to avoid interest charges.
- Sign up for any relevant email newsletter so you get offers from bonus partners
Most reward programs will have a newsletter which will keep you aware of useful offers to earn extra points
- Find out which bills you can pay on the card to earn frequent flyer points.
Check the terms and conditions of the card for this. Most bill payments are considered purchases when the biller accepts credit card payments, rather than cash advances (which won’t attract points). The BPay website also lets you know whether a biller accepts credit cards. Recently some banks have stopped allowing points to accrue for bill payments and out of the ‘Big 4’ the CBA and Westpac do not allow this, so check with your bank.
- Consider using the card for expenses you can claim back from work
Meals, travel costs etc. Just make sure you will be reimbursed within a reasonable time to cover your credit card repayments.
- Start your frequent flyer research by checking the earn rate for different airline programs and the different cards they offer.
- Choose a card with an annual fee that costs more than the value you will earn back in points;
You need to make sure you’re getting something out of the card and not just paying the bank for the privilege of keeping a piece of plastic in your wallet.
- Miss an opportunity to shop with a bonus partner;
This really goes without saying. If you’re not spending on the card, and in the right places, you’re missing opportunities to earn points that will see you fly away sooner.
- Carry any balance on the card from one month to the next;
Interest payments will quickly outweigh any benefit you would gain from points earned. If you carry a balance on your credit card, consider swapping to a low rate credit card until you have it under control, and if necessary do a balance transfer and don’t use the card for spending until you have paid off the entire balance. Some frequent flyer cards have a balance transfer rate, but longer offers or better rates may be with another type of card.
Avoid unnecessary fees and charges
There are some fees and charges you can easily avoid with frequent flyer credit cards, so watch out for these and take the necessary steps to avoid them:
Currency conversion fees (usually a $4-$5 fee plus 2-3% of the transaction value):
You can often earn more points for purchases overseas than here at home, but if you’re not careful the benefits can quickly be eaten up with currency conversion and foreign transaction fees. If you’ll be spending a lot while you’re away, consider an option with no currency conversion fees or check the fine print to see whether these are waived with your frequent flyer card (often they can be, especially for higher tier platinum cards).
Late Payment fees (Often around $20, but can be higher):
Make sure you are aware of your payment due date from your monthly statement and schedule a payment to arrive on or before that date. This may mean allowing an extra 2-3 days for a BPay payment or payment to another bank account because these can take at least a couple of business days to be processed.
There have been cases where one late payment can cost as much as $100 in fees and interest on the payment amount, so it’s worth paying attention here.
If your payment is due on the 5th of the month, any transfer should be done before the 2nd, for example to ensure it is in the right account on or before the payment due date.
Over limit fees (can be as low as $9-$10 or $25 or more):
You shouldn’t be in danger of going over your credit limit if you pay your balance off each month, but if you did opt in and consent to over limit fees rather than have the bank decline any transaction that would take you over your credit limit this is a potential fee. Consider whether you should opt out again and let the transaction be declined anyway.
Statement request fees (can be $5 or more):
This is a fee you’d pay if you need to request a paper statement for some reason. It can easily be avoided by using online banking to view your transaction history and statements, and printing one off if necessary.
Aside from fees and charges, and maximising points you should think about and research these common issues:
Which card to use: Amex vs. Mastercard or Visa?
American Express cards often offer a higher points-earn-rate than Visa or Mastercard, but incur higher transaction charges and are not accepted as widely.
Some card accounts issue two types of card with the account giving you both an American Express (AMEX) card and either a Mastercard or Visa card.
The American Express card will usually have a higher earn rate for points, but may not be accepted everywhere, so it can be used where accepted and should help your points balance rise faster. It will likely incur higher fees and charges however, which points are not earned on.
For everyday purchases where AMEX is not an option, the Visa or Mastercard will still allow you to earn points but usually at a lower earn rate, (usually between 0.5 and 1 point per $1 spent). If you’re shopping with a bonus partner you should still receive additional points when using Visa or Mastercard.
Many flyer programs will not let you have both options, and there is a range of American Express cards not linked to a bank, which will still let you earn points to choose from. You can view the options on the table in the link above, or our American Express page.
Terms and conditions
It’s important to understand the relevant terms and conditions around any frequent flyer card you’re considering. There may be rules or exceptions around earning and redeeming points you need to be aware of.
- Some purchase offers may apply to specific items only – i.e. more points earned when paying at a high-end restaurant (common with American Express premium cards)
- Some bills you want to pay may not be eligible to earn points
- Airlines often have their own rules about airfares and seats that are eligible to be booked with frequent flyer points. We’ve discussed this in more detail below, but rules and conditions are set by the airlines and often change. Keep up to date with current rewards conditions and policies separately to what you read here.
Best use of your frequent flyer points
Many believe that simply booking a flight is the best use of their frequent flyer points, but if you do a little research, you might find that paying for a cheap airfare and using points for an upgrade or on some types of merchandise or perks might be wiser when you add up the numbers. If you’ve found an airfare that’s already 50% off consider the damage to your overall points tally compared to what you will get if you save more points and use them for a longer international flight.
Often it works out better to save your points for longer, or use them to upgrade rather than purchase the ticket outright. Checking out frequent flyer forums and reading articles can help you understand how to make the best use of your points.
Other rewards, gift vouchers, merchandise
Many frequent flyer programs offer rewards that have nothing to do with flights, such as gift vouchers, bottles of wine, entertainment packages or other gifts. Consider the points currency of any reward you’re looking at redeeming and work out whether the number of points you pay for the item, versus the retail cost, is in fact value for money. In a lot of cases it makes more sense to buy the item and save your points for a flight or upgrade.
Merchandise rewards are also covered in more detail below.
Frequent flyer credit cards can also come with a host of other perks, such as
- Purchase security
- Overseas travel and medical insurance
- Car rental insurance
- Flight inconvenience insurance
- Anti-fraud protection
- Discounted or waived international transaction fees
These will be laid out in the terms and conditions and discussed on the features page for that card, so consider what’s on offer and what you might end up using.
Frequent flyer cards you can use overseas
Some frequent flyer credit cards will offer additional points for purchases made overseas, for example the HSBC and Citi frequent flyer cards, which offer 2 points per $1 spent overseas. If you want to use the card while you’re away, you should check out the points earn rate as well as any currency conversion fee. This will help you work out whether the card is worth the annual fee and whether you’ll earn enough points to actually take flights.
Some platinum level cards may offer a reduced conversion fee or waive the fee altogether, so check the details on the actual card you’re considering.
Choosing a Frequent Flyer Program
When deciding between different frequent flyer programs, ask yourself some simple questions;
Which airlines can I fly with?
How many options are there? Are they airlines you are likely to use in the near future? Remember these couple of pointers:
- Qantas and Emirates are now partner airlines so flights can now be booked with points from either rewards program. Qantas also run Jetstar Airlines and points can be redeemed with them.
- With Qantas Frequent Flyer points you can fly on 36 different airlines, as part of the One World Alliance, and with Jetstar flights beginning with JQ. Airlines include; British Airways, American Airlines, Cathay Pacific, Japan Airlines, Malaysian and more
- Jetstar Awards can also be used on Jetstar Asia flights and some other Jetstar airlines
- Virgin Airlines partners include Etihad, Virgin Atlantic, Singapore Airlines, Air New Zealand, Delta and Hawaiian Airlines.
Do your homework to find out which program will allow you to earn enough points with airlines you want to fly with. A great place to start is the
Will my flights be mainly domestic or international?
For domestic fliers a program offering discounts on additional seats, such as Virgin, might appeal, or for those who fly Jetstar often Jetstar Awards might work out well. Jetstar is also a popular airline for travelling to New Zealand, Asia or the Pacific Islands. Qantas points will give you the flexibility of Qantas or Jetstar flights, and Virgin also does flights to places in the Pacific and Hong Kong in Asia.
What about airline alliances?
International fliers will know about the One World, Star Alliance and Sky Team alliances too. Members who fly to other countries frequently will really benefit from the option to use points on international airlines and some of the other perks that can come with membership – such as hotel and car rental discounts. These alliances mainly work for frequent business travellers, so for example if you have to fly to Los Angeles with Qantas and then on to New York with American Airlines, all your flights will earn you miles – with no need to join any separate frequent flyer program. If you’re interested in a Round The World (RTW) fare, an alliance may be the way to go. Multi-flight itineraries can be organised on a RTW fare without inconvenient stopovers in many cases due to airline alliances.
Do I need to join an alliance separately?
No, the airlines join alliances independently, which means they can also decide to leave an alliance if it is not working out for them. Continental airlines in the US recently did this, and the process took 18 months, so it’s not a decision taken lightly but it’s important to be aware that it could happen. Your points earned are stored with the airline individually, so if the airline decides to leave an alliance your points may be transferred or forfeited.
If you are heading off on a year backpacking around the world, you don’t join an alliance per se – you just need to pick a suitable frequent flyer program that has a good alliance membership to get you to your destinations using and earning points. Research current members of the major alliances and talk to a travel agent or read the frequent flyer forums to find out what might be a good fit for you.
Are there any appealing merchandise rewards? Are they available elsewhere?
It’s important to think about the value of any merchandise rewards you’re considering. These generally won’t have as much value for your points when you compare the Recommended Retail Price to the amount of points you need to spend to claim, called the points currency.
There are a lot of rewards credit cards that are geared towards merchandise and gifts, so the best deals on those will mostly be with one of them.
Frequent Flyer Credit Cards - Frequently Asked Questions
Qantas credit cards are those offered in conjunction with a bank or financial institution operating under the terms and conditions agreed between Qantas and the card issuer. These allow Qantas Frequent Flyer members to earn points for using their credit card, whether it is American Express, Mastercard or Visa, and transfer the points directly from the bank to your Qantas membership.
Credit cards which are branded as Qantas – for example the American Express Qantas Discovery card and the HSBC Platinum Qantas credit card do not have other airline rewards programs available except that of Qantas. The Qantas program may offer access to other airlines that they have partnerships with however, (i.e. Jetstar). You should read the small print on this carefully if you have any doubt.
Velocity credit cards are credit cards offering cardholders the chance to become Velocity Flyer club members and earn points when they use their credit card. Velocity is the popular frequent flyer program run by Virgin Airlines and is free to join. There are Visa, Mastercard and American Express card options for Velocity rewards, not to mention the Virgin Money range.
The Emirates Citibank Platinum Credit Card allows you to earn Skywards Miles.
There are credit cards from American Express, ANZ, Citi, Bankwest, NAB, HSBC, Westpac and Diners Club which allow you to earn Qantas Frequent Flyer points on our Frequent Flyer table. For your convenience names have been listed.
The official answer to this (from the Qantas Frequent Flyer program) is that credit card partners usually transfer their points across to the member’s account at the same time each month. So long as you have had points transferred previously, you can check your previous statement to find out roughly when each month points should be credited.
Qantas also advises that if you have just received your first statement, the first points transfer mostly occurs after you have made your first payment.
If you are waiting for points to be transferred across, you should double check that all your membership details are correct, and that the Frequent Flyer account and your credit card are both in exactly the same name.
Some credit card providers may have certain terms and conditions allowing them to withhold points for some reason. You should check your card’s terms and conditions to see whether one of these reasons could apply and contact the bank to discuss it further.
The usual waiting time for a Frequent Flyer card is 10-14 business days (as per the QFF website). If you joined at the same time as you applied for a credit card you should receive both cards within a few days of each other.
If you have been waiting longer than 14 business days for your membership card, you should contact the Frequent Flyer service centre.
If you applied for membership from outside Australia, you will not receive a card, just a membership number.
Yes, other airlines will often have their own frequent flyer program. Emirates frequent flyer card is in partnership with Citi and many of the other airlines are linked to other banks through their own rewards programs. For example some American Express credit cards allow points to be redeemed with a number of different airlines worldwide as well as Qantas and Virgin.
You can check which airlines non Qantas or Velocity frequent flyer credit cards allow cardholders to earn points with by reading the card’s own terms and conditions.
You usually do need to purchase some portion of your travel ticket and/or accommodation on your credit card to be covered by the travel insurance. You can find out exactly how much, and what you need to purchase by checking your card’s terms and conditions. The insurance information is often a separate link within the main terms and conditions.