Compare Credit Card Rewards
Rewards programs have become hugely popular in Australia over the last few decades, but are they really providing you with worthwhile benefits?
Australians love reward programs. Many of our largest retailers have their own loyalty and rewards programs for spending in their stores, and for many years the airlines have also had their frequent flyer programs to entice more customers.
Once of the best known forms of rewards programs are those offered with credit cards.
The idea of a credit card rewards program is quite simple. For every dollar you spend, you will receive a certain number of rewards points. Often you will receive one point for each dollar spent, however this can vary.
The rewards points you earn can be put towards obtaining goods or gift vouchers, and as a result we feel like we’re getting something for free.
Although the idea of getting something for nothing may sound great, credit card rewards programs are certainly not for everyone, and in some cases they will cost you more than any benefit you may receive.
What To Look Out For
Credit cards that offer rewards points are typically more expensive than cards without rewards programs. Generally a rewards card will have higher ongoing fees or a higher interest rate, and in some cases it will have both.
Many cards simply offer one point for each dollar you spend, however some cards only offer half a point per dollar spent, which means you have to spend twice as much just to receive one point.
It is common for many rewards programs to limit the number of points you can earn each month or each year. You may find yourself hitting your points limit early in the period, which means you are missing out on potential rewards.
Choosing A Rewards Credit Card
The right rewards credit card for you will depend on your own spending patterns and objectives.
You need to weigh up the fees and charges against the benefits of the rewards program as a whole, rather than just looking at each factor individually.
For example if you are a very high spender and need a higher points limit, then it may be worth paying a higher card fee to access a card with unlimited points. There’s no point saving $100 a year in fees if you are going to lose $500 a year worth of rewards.
Another area to consider is how you can use your points. Some rewards programs will only allow you to use your points towards receiving goods, whilst others will give you access to gift cards and even cash.
Some cards allow your points to be credited directly to your chosen frequent flyer program, but not all cards provide this feature. If you want your rewards points to go towards your frequent flyer points, you need to choose a card that allows this.
Compare Rewards Credit Cards on MoneyBuddy.
Are Credit Card Rewards Right For Me?
Not everyone will benefit from a credit card rewards program.
Most credit cards offering rewards point will charge a higher rate of interest. If you are able to clear your balance each month and have a card with interest free days, this isn’t a concern. But if you do not clear your balance and are charged interest every month, the charges could offset any benefit you receive from the rewards program.
You also need to consider how many points you will be earning on your card. If you only spend a small amount on your card each month you may not earn enough points to cover the increased fees on your card. If this is the case for you, then you’re probably better off with a low rate card rather than a rewards card.
If you are a high volume spender who clears their balance each month to avoid interest, then the right credit card rewards program could definitely provide you with worthwhile benefits.