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Is It Time To Redeem Points For Travel Again?
Smart Money

Is It Time To Redeem Points For Travel Again?

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At the start of the pandemic, Australia closed its borders to international travel. With no one allowed out, and only a trickle allowed in, that effectively put an end to any overseas travel plans Aussies had lined up. And we were a nation that loved to travel!

Back in 2019, Aussies took 11.3 million trips overseas. Hopping across the ditch, NZ was our most popular destination, with Indonesia – ahem, Bali – bringing up a close second.

According to a report recently released by travel company Skyscanner, far-flung destinations such as Rome, Phuket, Koh Samui, Milan, Santorini, Nadi Fiji, New Delhi, Athens, Venice and Las Vegas dominated our travel itineraries in 2019.

Unsurprisingly, all that changed once the travel ban was put in place. Keen adventurers had to look inward for exploration, eyeing up the reef, the rainforest, and the glorious red centre. Meanwhile, those who wanted to get away from it all had to look within Australia’s – admittedly very appealing – borders for R&R.

So, where did we go? Skyscanner’s report shows the top nine trending search destinations for Australian travellers through 2020 into 2021 included Proserpine (for travel to the Whitsundays), Hamilton Island, Alice Springs, Broome, Darwin, Hobart, Cairns, Adelaide and the ever-popular Gold Coast.

Travel Spending On The Rise

Now, with the NZ travel bubble hesitantly in place – and our own internal borders remaining more or less open – many Aussies are cautiously considering expanding their travel plans.

Looking to the Citi Australia Credit Card Index for confirmation of this, travel spending does seem to be on the rise. Citi’s stats show that spending on airlines increased 69% in March, compared to the previous month.

With that being said, that increased spend is still significantly lower than it was in March last year. Forty-four per cent lower, in fact. Predictably, cruise line spend is also suffering, experiencing a 45% drop in spending year-on-year to March.

Using Your Credit Card To Get Travelling Again

Sure, you may not be ready to hop on a cruise just yet. But, you may now be making plans to take a trip, either within Australia, or over to New Zealand. Perhaps even to Singapore or Fiji, if the promised travel bubbles pop up there too.

So, what are your options to pay for your adventure? If you don’t have cash stashed away, you may be looking sideways at your credit card for help. Credit cards can indeed come in handy at times like this, but it’s important to be smart about how you use them.

Which is why in this post, we’ll get into the various ways you can use your credit card to cover the cost of your next trip, including using points to pay. From there, we’ll uncover the best cards to boost your points balance by 100,000 points or more, to then cover some tips for travelling in these post-pandemic times. 

Using Your Credit Card To Pay

First up, let’s get into what you need to know before you flex your plastic on that much anticipated trip.

Let’s talk credit limits. To cover flights, accommodation, tours, activities, and whatever else is involved in your travel plans, you will need to have the credit limit to accommodate it. If you’re unsure of your credit limit, or how much of that credit limit you have available, a quick check of your balance online should tell you what you need to know.

Now you know how much credit you have available to spend, it’s time to think about how much you can afford to spend. While it can be tempting to put large expenses such as a holiday on your credit card, it’s not a good idea to do that unless you have a plan in place to pay it off.



Option 1. Pay It Back Quickly

If after tallying up a quick budget, you find you have enough available to pay back your holiday spending over the next few months, you could simply use your card to pay. 

Making It Work

With this option, you use your card to cover your trip, being sure to stick to your allotted budget. You then set a strict repayment schedule to pay back a predetermined amount at regular intervals. Aim to pay off your entire balance within a few months.

Remember…

Unless you pay off your balance by your next statement due date, you will pay interest on the amount owing. Also be aware that any spending you make on your card while you carry a balance will not benefit from interest free days.

Option 2. Apply For A 0% Purchase Card

If you don’t like the idea of paying interest on your balance, or you think it will take longer than a few months to pay off, you may choose to apply for a 0% purchase card. With a 0% purchase card, you pay 0% in interest on purchases over an introductory period.

Making It Work

Again, you’ll need to set a budget and stick to it. Know how much you can afford to spend by gauging how long it will take you to pay it back. Set up a repayment schedule that allows you to clear your balance within the introductory period.

Remember…

While holidays can be awesome, you really don’t want to be paying yours back years after you return home. Try to pay off your balance as quickly as possible, but specifically before it starts accruing interest.

Option 3. Opting For a Balance Transfer

With a balance transfer offer, you transfer the balance from your old card to a new card to take advantage of 0% interest over an introductory period. Using this option, you can save on interest to pay off your holiday spending faster.

Making It Work

Transfer your balance to the new card, then set up a repayment schedule to repay the transferred amount within the intro period. Avoid new spending in the meantime, and close the old card account if you no longer need it. 

Remember…

It’s not a good idea to splurge on your credit card simply because you know you can transfer the balance afterwards. If your credit isn’t up to par, or your debt is deemed to be too high, you may not get approved. This will leave you with a large balance accruing interest every day until you manage to pay it off.

Using Points To Pay

Have you been squirreling away points over the pandemic? You’re not alone. More research from Citi found that one third of Australian cardholders have been deliberately saving their points until they can travel again.

And so it seems, now may be that time.

Between March and April, Citi’s stats show rewards points redemptions increased by 6%, with travel related redemptions experiencing an even sharper incline. Points redemptions on general travel and experiences grew by 10%, while Velocity Point redemptions surged 14%.

According to Choong Yu Lum, Head of Credit Cards at Citi Australia, this spike was likely triggered by the introduction of the New Zealand travel bubble, however domestic travel also saw improvement. 

So, is it time to dust off that points balance? Here’s what you need to know before you use your points to pay for travel.

#1. Consider Value Above All Else

You worked hard for those points. You don’t want to waste them. Before you redeem your points, calculate the dollar value of what you’re getting in return. Let’s look at an example within the Qantas program.

  • Redeeming 18,000 Qantas Points, you could travel one-way in Economy from Sydney to Auckland. If you were to travel that route on Qantas mid-week in June, you would pay $358.
  • Staying within Australia, you could redeem 18,000 Qantas Points on a one-way Economy flight from Sydney to Cairns. Paying cash money, you would pay out $196 for that flight at a similar time in June.
  • Alternatively, in the Qantas Store, you could redeem 18,950 Qantas Points for an Apple Smart Folio for iPad Air (4th generation), valued at $109.

#2. You Will Pay Taxes And Other Costs

If you choose to redeem your points for travel, you will usually pay extra for taxes, fees, and other associated costs. If you’re trying to keep to a budget, find out how much these costs will come to before you redeem.

#3. Check The Cancellation Policy

What happens if the borders close before you take your trip? What if you are deemed a close contact to a COVID case, and isolating means you can’t travel? Find out what happens to your ticket if you have to cancel your travel plans unexpectedly. 

You may find you are offered a travel credit, or your points are returned to you. Alternatively, you may lose your points and your trip, although this will depend on your rewards program and your carrier.

Topping Up With Bonus Points

If your points balance is too low to cover the cost of your trip, you may have the option to make up the difference with your card. Again though, this leaves you with an out-of-pocket cost you will have to pay back before it starts accruing interest.

Alternatively, you could apply for a new card to take advantage of bonus points. Here are some of the best options on the market currently offering intro bonus offers of 100,000 points or more.

ANZ Rewards

With the ANZ Rewards Black credit card, you could earn 180,000 bonus ANZ Reward Points when you spend $2,000 on eligible purchases in the first three months. This card packs a punch with no annual fee in the first year, however, its standard annual fee is sizeable, at $375.

With the ANZ Rewards Platinum Credit Card, you could earn 120,000 bonus ANZ Reward Points when you spend $1,500 on eligible purchases in the first three months. This card also charges no annual fee for the year, then reverts to $95 per year thereafter.

In terms of travel options, ANZ Rewards allows you to transfer points to Velocity Points (at a special rate of 2 to 1 during May), to Air New Zealand Airpoints Dollars (at a rate of 200 to 1), to Singapore Airlines KrisFlyer Miles (at a rate of 3 to 1), or Cathay Pacific Asia Miles (at a rate of 3 to 1).

NAB Rewards

With the NAB Rewards Signature Credit Card, you could earn up to 120,000 bonus NAB Reward Points when you keep your card open for over 12 months. Provided on a tiered basis, the card offers 90,000 points when you spend $3,000 within the first 60 days, then 30,000 points after 12 months.

The card comes with an annual fee of $295, which you’d need to pay twice in order to get the full 120,000 points bonus.

As for frequent flyer transfer options, you can convert NAB Reward Points to Velocity Points (at a rate of 3 to 1), to Air New Zealand Airpoints Dollars (at a rate of 200 to 1), to Singapore Airlines KrisFlyer Miles (at a rate of 3 to 1), or Cathay Pacific Asia Miles (at a rate of 3 to 1).

NAB Rewards also allows you to redeem points directly via  Webjet to fly any airline, in any seat.

Altitude 

With the Westpac Altitude Black Credit Card, you could earn 150,000 bonus Altitude points when you spend $4,000 on eligible purchases within 90 days of card approval. You will pay an annual fee of $250.

Within the Altitude program, you have the option to transfer Altitude points to Velocity Points (at a rate of 3 to 1), to Air New Zealand Airpoints Dollars (at a rate 180 to 1), to Singapore Airlines KrisFlyer Miles (at a rate of 3 to 1), or to Cathay Pacific Asia Miles (at a rate of 3 to 1).

You can also book travel direct within the Altitude program, using your Reward Points to book flights, hotels, car hire and other activities.

Amplify

With the St.George Amplify Signature Credit Card, you could earn up to 200,000 bonus Amplify points over two years, as long as you spend $12,000 on eligible purchases each year. This card comes with a $279 annual fee, which you’ll need to pay twice to get the full points bonus.

Transfer options within the Amplify program include transferring to Velocity Points (at a rate of 2 to 1), to Singapore Airlines KrisFlyer Miles (at a rate of 2 to 1), or Malaysia Airlines Enrich Points (at a rate of 2 to 1).

Citi Rewards


 

With the Citi Rewards Card special Bonus Points Offer, you could earn 100,000 bonus Citi reward Points when you spend $3,000 in the first 90 days from card approval. This card offers a reduced annual fee of $49 in the first year, which then reverts to $149.

Earning Citi reward Points, you have the option to transfer them to Emirates Skywards Miles (at a rate of 3 to 1), to Velocity Points (at a rate of 2.5 to 1), or to Singapore Airlines KrisFlyer Miles (at a rate of 3 to 1).
 

American Express Membership Rewards

With the American Express Platinum Charge Card , you could earn up to 200,000 bonus Membership Rewards Points over two years. You will get 150,000 points when you spend $3,000 within the first three months, then an additional 50,000 points after the second year.

This card has a significant annual fee of $1450, which you will need to shell out for twice if you want the full points bonus. Obviously, the card comes with heaps of extras to make paying the annual fee worthwhile, but of course, they will need to provide value to you to make it worth paying.

Within the Membership Rewards program, transfer rates vary by cardholder. These are the transfer rates for Membership Rewards Ascent cardholders.

Transfer to Air New Zealand Airpoints Dollars (at a rate of 200 to 1), to Cathay Pacific Asia Miles (at a rate of 2 to 1), to Emirates Skywards Miles (at a rate of 2 to 1), to Etihad Guest Reward Points (at a rate of 2 to 1), to Malaysia Airlines Enrich Points (at a rate of 2 to 1), to Singapore Airlines KrisFlyer Miles (at a rate of 2 to 1), or to Velocity Points (at a rate of 2 to 1).

Velocity


 

With the Citi Rewards Credit Card special Velocity Points Offer, you could earn 100,000 bonus Velocity Points when you spend $3,000 in the first 90 days from approval. This card has a reduced annual fee of $99 in the first year, which reverts to $199.
 

Qantas

With the NAB Qantas Rewards Signature Credit Card, you could earn up to 110,000 bonus Qantas Points over two years. You earn 90,000 points when you spend $3,000 in the first 60 days, plus an extra 20,000 points when you keep your card open for over 12 months. This card has an annual fee of $295 in the first year, then $395 per year.

With the ANZ Frequent Flyer Black Credit Card, you could earn 120,000 bonus Qantas Points and $200 back to your card, when you spend $3,000 on eligible purchases in the first three months from approval. This card comes with an annual fee of $425.

Note, all offers, annual fees and other details correct at time of writing.
 

Things to keep in mind

  • Typically, these cards are harder to get approved for as they are all considered ‘high end’. To be approved, you will need to have excellent credit, and your annual income will need to be over a certain amount.
  • Most of these cards come with a sizeable annual fee. Consider the affordability of the annual fee before you apply, and weigh up the card’s offering to calculate its value.
  • To be eligible for bonus points, you will need to spend a certain amount on the card within a specified period of time. Make sure you can afford to make that spend – and pay it off before it starts accruing interest.
  • Check the small print to find out how long it may take to receive your bonus points. Some card providers take up to 12 weeks to credit bonus points to cardholders’ accounts – and that’s only after they’ve reached the minimum spend.

 
Could Your Points Take You To New Zealand?

Want to use your points to hop across the ditch? Whether you want to hit the slopes this winter, or take your time exploring everything New Zealand has to offer over the warmer summer months, your points could take you there.

So, how many points should you expect to shell out?

  • Travelling Qantas from Sydney to Auckland, you would redeem 18,000 Qantas Points for a one-way Economy flight, or 41,500 Qantas Points for one-way in Business.
  • Travelling Virgin Australia on the same route, you would redeem 17,800 Velocity Points in Economy, 26,700 Velocity Points in Premium Economy, or 35,500 Velocity Points in Business.

It’s worth mentioning that Virgin Australia has stated it will not re-introduce its New Zealand flights until the end of October. 

Tips! Tips! Tips!

With borders opening and closing, opening and closing, making travel arrangements can feel like something of an adrenaline sport. If you’re considering booking a trip – either here in Australia, or over to New Zealand – here are some tips that could make the process run that much smoother.


 

  • Stay Informed

Stay up to date on travel restrictions and advice by keeping an eye on sites such as the government’s Smart Traveller site. ABC News also covers COVID news as it happens on its Coronavirus Blog. 

  • Book Last Minute

In the past, booking in advance meant getting the best deals. Now though, you may want to consider holding off on booking until closer to your departure date to avoid getting stuck behind closed borders. Bear in mind this may affect the availability and cost of your booking.

  • Invest In Travel Insurance

You can now get travel insurance that covers COVID related events. But, these policies still come with restrictions. You may find you benefit from cover should you be deemed a close contact or you’re forced into hotel quarantine, but you won’t be covered against border closures or overseas travel bans. Read the policy wording carefully before you buy.

  • Opt For A Flexible Fare

While you may pay more for a flexible fare, it should give you peace of mind that you can either cancel or change your booking if you have to change your travel plans. When booking flights, accommodation, activities or anything else in advance, be sure to check their refund policy in case you have to cancel. Most providers have become much more flexible with this since COVID.

  • Consider Booking With A Travel Agent

Even if you are used to booking travel online, you may find switching to a travel agent is beneficial in these post-pandemic times. Unlike you, travel agents read the small print, and they also know where to find bookings that offer provisions such as refunds and full flexibility.

  • Stay Local For Now

Even with travel to New Zealand opening up, there’s plenty to see here in Australia. If your points balance is looking a little low, here are some home-grown options for you to consider.

Using Velocity Points:

  • You could travel Sydney to Perth, or Sydney to Darwin for 22,300 Velocity Points in Economy, 36,700 Velocity Points in Premium Economy, or 49,500 Velocity Points in Business
  • You could travel Sydney to Cairns for 17,800 Velocity Points in Economy, 26,700 Velocity Points in Premium Economy, or 35,500 Velocity Points in Business.
  • You could travel Sydney to Adelaide, Sydney to Hobart, Sydney to Brisbane, or Sydney to Melbourne for 11,800 Velocity Points in Economy, 17,700 Velocity Points in Premium Economy, or 23,500 Velocity Points in Business.
  • You could travel Sydney to Canberra for 7,800 Velocity Points in Economy, 11,700 Velocity Points in Premium Economy, or 15,500 Velocity Points in Business.

Using Qantas Points:

  • You could travel Sydney to Perth, Sydney to Cairns, or Sydney to Darwin for 18,000 Qantas Points in Economy, or 41,500 Qantas Points in Business.
  • You could travel Sydney to Adelaide, or Sydney to Hobart for 12,000 Qantas Points in Economy, or 27,600 Qantas Points in Business.
  • You could travel Sydney to Brisbane, Sydney to Melbourne, or Sydney to Canberra for 8,000 Qantas Points in Economy, or 18,400 Qantas Points in Business.

 

  • Get A Vaccination Passport (When It’s Available)

According to a new Ipsos survey, 86% of Aussie adults agree that COVID vaccine passports should be required of travellers to enter Australia. While these so-called vaccine passports are now being trialled elsewhere however, it may be a while before one is launched here.

During a recent interview on 3AW, Prime Minister Scott Morrison said he was open to the idea of ‘vaccine passports’ to allow people to travel more freely, adding it was something his medical expert panel was “working on right now”.

“I think that is the next step, but I do think that next step is some way away,” Mr Morrison said. “If you’re fully vaccinated, that you would be able to travel, certainly around Australia, but maybe overseas, without the need for hotel quarantine.”

Earlier last year, Air New Zealand became one of the first airlines to trial using a type of vaccine passport via the International Air Transport Association (IATA) app. Meanwhile, Qantas has been trialling a number of digital passport apps, including the IATA app.

Photo source: Getty Images
Founder - Roland B Bleyer

Roland Bleyer

Founder of Creditcard.com.au. Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. This special offer has no annual fee first year, a low purchase rate and long 0% balance transfer. Have a look also at the huge 0% for 30 months balance transfer from Citi with no balance transfer fees.

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