Compare Rewards Credit Cards

There is no shortage of Australian rewards cards including cash back, shopping vouchers, gift cards, merchandise and gifts to choose from, frequent flyer points which can be redeemed when booking flights and more. However, you need to be aware that the annual fees and interest rates are usually above average.

However, rewards cards offer some really fantastic benefits, which is why they appeal to so many. In order for your application to be approved you will need to be at least 18 years old, have a very good credit history and a higher than average income. You’ll also need to spend a considerable amount on the card and pay off any balance in full every month, otherwise the rewards will be outweighed by the amount of interest charged. If you meet these criteria, then a reward card may be just what you’ve been looking for.

What You Need to Know About Rewards Credit Cards

Rewards credit cards offer the chance to earn points when you use your credit card, save them up and then redeem them for your choice of rewards. There are many different rewards available on the market providing access to a variety of loyalty programs and options for redeeming points.

This type of credit card is suitable for people who like to spend large amounts of money on their credit card and repay the balance in full each month, and are generally aimed at above-average earners with good credit ratings. More specifically, the type of people who benefit the most from rewards programs are those who travel often and can make use of frequent flyer programs, and people who love to shop and spend regularly at companies affiliated with the rewards scheme.

Different rewards program credit cards have different ways of earning points, but usually you earn one or more point for every dollar you spend on your card, earning extra points when you spend with specified companies that are partners in the rewards program. These companies include airlines, hotel chains, rental companies, retail outlets, restaurants and resorts, for example.

The important aspect to consider when choosing a rewards program is not how many points you earn per dollar spent, but the actual value of the points. By looking at how many points you need for the rewards you would like to get, you can calculate how much you need to spend before you accumulate enough points. This will give you an idea of whether the rewards you want are realistically attainable and the scheme offers genuine value for money.

Reward credit cards tend to have a relatively higher interest rate and annual fee than other standard types of card. It’s essential that these rates and fees don’t cancel out the benefits of the rewards program.

There is a huge choice of products and services on offer that can be exchanged for points. Different cards have different types of reward, with many providing membership to wide-ranging rewards programs with many affiliated companies. The rewards you can choose from include travel products and services, rentals, retail items, shopping vouchers, leisure and entertainment, and more.

Frequent flyer programs are among the most popular; in which members earn points when they use their credit card and redeem them for travel rewards. This type of scheme is great for people who travel often for business or leisure, allowing cardholders to earn free flights, and also usually offer many non-travel related rewards.

There are many options for retail rewards available, including the opportunity to earn extra points when shopping at certain stores. Points can be redeemed for shopping vouchers or for discounts on goods and services. This type of scheme is a good choice if you like to shop, particularly if you can find a program that involves the stores and brands you already spend money on.

Cash back rewards generally function in one of two ways. Some credit cards have a cash back feature with which a percentage of each purchase is paid back into your account, with a higher rate when you spend with specified companies. The other type of cash back is associated with rewards programs, in which you earn points and then redeem them for cash, either in the form of a shopping voucher or a payment back into your account.

Another option is a charity credit card where the reward is paid to a chosen charity, usually a percentage of each purchase on your card, and can also feature an annual donation.

Five Tips on Using a Rewards Credit Card

Know how your points work: Rewards programs have various ways in which point earning and redeeming functions. Some schemes also have capping, which means there is a limit on how many points you can earn, and an expiry date, which means there is a limited period to use your points. Make sure the scheme you join gives you the freedom to earn and use your points in the way you want. If there is an expiry, make sure you use your collected points before they become invalid.

Spend on your credit card: The more you spend on your account, the more points you earn. Identify which of your everyday purchases you can make using your credit card, items you would usually pay for with cash or a debit card, meaning that money you would normally spend is now earning points. If you do adopt this strategy, however, it is very important that you put the money aside to pay the bill at the end of the month and don’t start over-spending. You shouldn’t spend for the sake of earning points, but make your regular purchases using your credit card.

Make the most of bonus points: Many programs feature introductory offers with bonus points, or ongoing opportunities for bonus points with the scheme’s partnership companies. See if you can make the most of these offers, shopping for goods and services you would normally spend money on and earning extra points. Again, it is important not to spend on your credit card just to earn points, but instead identify where your normal purchases can earn bonus points.

Pay your monthly balance in full: As with any credit card, the best approach is to aim to pay your monthly balance in full and avoid paying interest. Rewards credit cards typically attract a higher interest rate than standard cards on purchases. If there is an ongoing debt on your account, paying off the interest can quickly negate the rewards. Rewards programs can be very beneficial if used wisely, but provide a false economy if you mismanage your credit card.

Avoid cash advances: Generally, cash advances do not earn points, but do attract a high rate of interest from the date the transaction is made. Try to avoid cash advances, reserving your credit card for purchases and using a debit card for cash withdrawals.

Typical Rewards Credit Card Features

Points earning, redeeming, capping and Exepiry: It is important to examine the details of how points are earned and redeemed, and any restrictions that may apply such as capping and expiry. Make sure that you are able to earn plenty of points and exchange them for the rewards that you want.

Rewards: Reward cards provide access to a wide variety of rewards and benefits. Have a look at what is on offer to ensure the rewards linked to the card you apply for are products and services that you really want and can make use of.

Purchase rate: This type of card typically features a higher purchase rate than many other standard credit cards. If you are likely to sometimes have an unpaid debt on your balance, this rate is an important factor to take into consideration. Look for a card with a low rate that provides access to the rewards scheme you want to use.

Annual fee: Most rewards cards have a relatively high annual fee. You should calculate how much this yearly charge negates the value of the rewards. Many cards with a higher annual fee are gold and platinum level credit cards; so, as long as you qualify and are comfortable paying a bigger fee, along with the rewards scheme, you should be able to enjoy a selection of prestigious extras and benefits.