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Has COVID Altered The Value Of Your Credit Card?
Smart Money

Has COVID Altered The Value Of Your Credit Card?

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Throughout much of Australia, life has changed significantly over the past few months. From the way we work to the way we play, we’ve seen changes unfold that we wouldn’t have thought possible this time last year. Just look at travel. While those living in Melbourne are kept to a 5km radius of their home, elsewhere in Australia, borders are closed between many of the states and territories, restricting who can travel where.

International travel is also a no-go. With a ban on overseas travel currently in place, those who want to leave Australia must get an exemption from the Department of Home Affairs. Meanwhile, returning Aussies who manage to find a flight home face mandatory 14-day hotel quarantine on arrival, the cost of which comes out of their own pocket.

Your Credit Card & COVID

What does this have to do with your credit card? Quite a lot, actually. Especially if you have a card that earns rewards. For the most part, rewards cards reward big spending, which is something many of us have cut back on during the pandemic. According to a recent survey carried out by J.D. Power, 42% of cardholders surveyed said they are now spending less on their credit card than before the crisis hit.

Certain lockdown restrictions have also resulted in a change in spending patterns. While 27% of survey participants said they were making more online purchases – no surprise there – a further 27% indicated using their card to cover household necessities, and 23% said they were using their card more often to pay household bills. So with travel spending on hold for now, not only are rewards cardholders earning less on their reduced spending, they may also be picking up fewer points on high-earn purchases such as flights and accommodation.

It’s perhaps no surprise then that more than a quarter of cardholders surveyed said they had plans to switch cards. Indeed, around two thirds of Aussie cardholders pay an annual fee, but only one third of those said the value they received from their card outweighed the annual fee they pay. This is especially true for premium cardholders who can no longer utilise the travel perks on offer, which in the past helped to balance out their higher annual fees.

With that in mind then, perhaps this is the time to take stock of your wallet and take a good look at your credit cards. Has COVID changed the way you use your card? Are you making use of its extras and getting value back on your rewards? Are you paying off your balance each month? Or are you paying more than you should in interest and fees?

Let’s find out.

Are Your Rewards Still Rewarding?

According to the J.D. Power survey, the majority of frequent flyer cardholders hold the wrong card, with the survey highlighting the fact that 63% of those who keep a frequent flyer card in their wallet have spending and usage habits that don’t align with their card’s offerings. So why is that?

Over the past few years, rewards programs across the board have scaled back considerably, lowering points earned per dollar, while increasing the number of points required to redeem rewards. So, while annual fees have remained the same – or increased, in some cases – the value of the rewards on offer has typically decreased, making it harder for cardholders to see true value from their card.

According to recent analysis, the average rewards card’s net value was $126 just five years ago, dropping to $79 in 2019, to then hit an all-time low of $34 in 2020. While scaling back within the world of rewards has a lot to do with that decline, the pandemic is also playing its part. As previously mentioned, we are no longer spending as much on our cards – and we are missing out on higher earn rates typically offered on travel spending.

Aside from earning fewer points, restrictions regarding the way that we can redeem them also work to lower the value of rewards. Historically, the highest return could be found on overseas travel redemptions, either in the form of flights or upgrades. With overseas travel likely off the cards at least until the end of the year, this has led many users to redeem their points elsewhere, only to get a much lower return.

So then, this seems like it would be a good time to look at your rewards card to find out if it still offers value to you.

  • Check your statement to see if your spending patterns have changed over the past six months. Look at your overall spend, as well as where you have been using your card.
  • Compare the number of points you earned this year to the number of points you have earned in previous years.
  • If your spending and points earn have changed dramatically, consider whether they are likely to return to previous levels in the near future.
  • Calculate the value of your points earn this year, and subtract the card’s annual fee to find out whether the card is worth keeping in the long term.

TIP: Check when your annual fee is due. If you paid your annual fee in recent months, it may be worth keeping your card to get as much out of it as possible. As long as you clear your balance each month, it may be an option to increase your spending to boost your points earn, and then wait for travel to open up to take advantage of higher value rewards. You can then reassess the situation before your annual fee is due next year.



If you find your frequent flyer card is no longer offering value – and you think the change is likely to be permanent – you may want to consider the following options.

  • Switch Rewards: If you see no future for you as a frequent flyer, you could look into other rewards options that reward everyday spending, such as cashback or Flybuys.
  • Opt For Low Cost: If you are no longer spending as much on your card, you may find more benefit from a low cost card. Choosing a card with no annual fee will give you access to credit with some basic extras on the side, while a card with low interest could help you save if you now tend to carry a balance.

Before you close your account, find out what happens to your accumulated points. Some points expire unless you hold a card with the provider, so find out if it’s possible to switch them to another account or convert them to another program. If not, work out how you can get the highest value reward from what’s currently on offer.


Are You Making Use Of Your Extras?

Credit cards range widely in their offering. While some options keep it simple, providing only the most basic features, there are many more that go all out on perks. Those perks don’t come for free though. If you want premium extras such as airport lounge access, hotel upgrades and travel credit, you should expect to pay a premium in annual fees.

But that’s not to say they aren’t worth it. As long as you make use of what’s on offer, you may indeed get more value from your card’s extras than you pay out in annual fees. What about now though? Many extras are focused on travel, which as we know, is limited. If you can’t travel, how much value are you really getting on those expensive perks?

  • Look at what extras your card offers and think about whether you are likely to use them before your next annual fee is due.
  • Check with your card provider to see if it is offering an extension on any of your time-limited extras, such as annual airport lounge passes and travel credit.
  • Consider your travel plans for the coming months. If you’re travelling within Australia, will you be able to make use of the extras during that trip?
  • Create a breakdown of the value of each extra you can utilise (and any rewards earned, if applicable), and compare that to the card’s annual fee.


What next? Now you’ve assessed your situation, you can choose to keep the card if you think its offering is still of value to you, or you could consider the following.

  • Keep & Reassess: If you paid your annual fee in recent months, it may be worth keeping the card to make use of the extras, in the hope that travel opens up soon. Reassess the value of your card before your annual fee is due next year.
  • Talk It Over: If your annual fee is due to be paid soon, consider talking over your options with your provider to find out what they may be willing to offer given the circumstances.
  • Make the Switch: If your circumstances have changed, and you are struggling to cover your monthly payments or annual fee, you may find switching to a lower cost card could be beneficial.


Are You Paying Off Your Balance Each Month?

With businesses failing during lockdown, and unemployment and underemployment on the rise, countless Aussies are now facing financial difficulties as a result of COVID. According to the J.D. Power survey, nearly one in five respondents (19%) said that since the pandemic began, they could not make their minimum monthly credit card payment.

If you are finding it hard to make the minimum payment on your credit card, your first point of call should be to talk to your credit card provider. Explain your situation and find out what options are available. It’s always better to find a solution before the problem gets out of hand, not only in terms of reducing your stress levels, but potentially saving your credit as well.

On the other hand, if you know you can make your minimum repayments, but seem to be carrying a balance more often than not, it could be time to reevaluate your card. This is especially important if you have a card with a high interest rate, such as a rewards card or premium card.

  • Check your card’s purchase rate. Compare this to other cards on the market using
  • Look at your statements over the past year to find out how much you have been paying in interest on your carried over balance.


After assessing your current repayment patterns – and the amount you have paid in interest on your balance – you may want to think over the following options.

  • Budget: By creating a budget, you may find you can cut back on some types of spending, which could allow you to clear your balance each month. This would help you save on interest, allowing you to keep your card, if you still find value in it.
  • Switch: If your circumstances have changed permanently, for example, your spending patterns have changed or your income has dropped, you may continue to find it difficult to pay off your balance each month. In that case, you may find switching to a card with a lower rate could help you save on interest.

TIP: If you work on paying down your balance to zero each month, you can take advantage of your card’s interest free days. This feature allows you to pay nothing in interest on your purchases, but you must pay off your closing balance by the due date the previous month to take advantage of it.


Can you get approved for a credit card on JobSeeker or JobKeeper?

Before you think about switching credit cards, it’s a good idea to look at your ability to meet eligibility requirements for a new card. Adhering to responsible lending regulations, card providers need to make sure applicants are able to repay any money they spend on their card before approving them for credit.

That means, if your circumstances have changed since you last applied for a credit card, you may find it harder to get approved if you apply for a new card now. When you apply, the card provider will look at your employment, your income, your debts and your credit report, to determine whether your application will be approved.

Being on JobSeeker or JobKeeper may affect your ability to get approved, but it will largely depend on the card provider in question, and the type of card you are applying for. If you are unsure about any aspect of your eligibility, it’s best to check with the provider before you apply.

If your application is unlikely to get approved, hold off on applying for now. Not only should this help to avoid the hit on your credit (declined credit applications negatively affect your credit score), it could give you time to make yourself a more worthy applicant, either as you pay down debt, build your savings, improve your credit, or find secure employment.


Can You Afford To Keep The Card In Your Wallet?

When it comes to keeping a credit card, there are a number of costs to take into account. Not paying off your balance each month will mean you pay out in interest. As for fees, you could be paying out in annual fees, late payment fees, over-limit fees, currency conversion fees, and more, depending on how you use your card.

Obviously you need to think about those costs when working out whether you can afford to keep a card. However, there is also the affordability of spending to consider. If you have a basic, no annual fee card, whether you spend on it or not is no big deal. On the other hand, with a rewards card, you need to spend a certain amount each month to make it worthwhile. So, can you afford that spending?

  • Check how much you are paying in fees on your card. Is your annual fee worth paying for what is offered in return? Can you avoid certain fees by changing the way you interact with the card?
  • If you carry a balance on your card, you will be charged interest on what you owe. With purchase rates reaching 22% p.a. on some cards, those interest costs can really stack up.
  • Think about whether you need to spend a certain amount on your card to make it worth keeping. Consider whether you can afford to spend this amount each month while paying off your balance before it starts accruing interest.


Taking a closer look at the costs associated with keeping your card in your wallet, you then have the following options to consider:

  • Change Your Ways: After assessing how much you’re paying out, you may find ways to reduce those costs by changing the way you deal with your card. That may mean always paying by the due date, or always clearing your balance.
  • Change Your Card: If you find you can’t maintain the spending required to make your card worthwhile, or the fees are not worth what’s on offer, it could be time to switch to a card that better suits your needs and your budget.

TIP: Think about what you really need from your credit card at this current point in time. Do you need perks? Or do you need to save money? Are you spending more at overseas retailers and want to pay less in fees for the privilege? Compare your options on to find a card that better matches your needs.


How Much Do You Owe?

When you have less coming in and you don’t adjust your spending, you may find your credit card balance starting to sneak upwards. The same might apply if you are spending more of your lockdown downtime indulging in online shopping therapy, without considering how it will affect your budget.

However it happened, if your credit card balance is now higher than you would like, this is the time to do something about it.

  • While it may be painful, take the time to look at all your debts, assessing how much each one is costing you. If you have a number of credit cards or store cards, you may find each has a different interest rate applied. Also take into account fees.


Now you know where you stand, you can choose which path you want to take to pay down your debt.

  • Manage Your Debt: If you know you can manage your debt on your own, work out a budget and a repayment plan. There are a number of ways to efficiently pay down debt, so check them out and choose the one that will work best in your situation.
  • Consolidate: If you have a number of balances attracting high interest, you could choose to consolidate your debt with a balance transfer card. As long as you meet eligibility requirements and manage your repayments, you could save on interest to pay off your debt faster.

TIP: If you opt for a balance transfer, it’s usually a good idea to close the old card account to avoid the temptation to spend on it. This should make it easier for you to focus on paying off your transferred balance within the introductory period.


Disclaimer: The information contained within this post is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Photo source: Shutterstock


Pauline Hatch

Pauline is a personal finance expert at, with 8 years in money, budgeting and property reporting under her belt. Pauline is passionate about seeing Aussies win by making their money – and their credit cards – work smarter, harder and bigger.

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