Australian Credit Card Reward Schemes Compared

Frequent flyer points, discount vouchers, cash back, and major shopping outlet coupons are but a few of the ways that financial institutions are rewarding customer credit card loyalty. Also referred to as ‘credit card reward schemes’ these incentives are becoming an increasingly popular way for Australian banks and credit unions to increase consumer expenditure via credit card. In some cases it is a win-win situation with banks making a profit and the credit card user walking away with ‘free’ merchandise or flights and as long as you’re smart when using your credit card it can definitely pay off in the long run.

The schemes work simply and effectively, basically when you use your card every dollar you spend has a value in terms of points. The amount of points earned varies from card to card and also from promotion to promotion, depending on what service you sign up for and the credit limit on offer. For example – a gold card holder with a $15,000 limit may earn a higher number of points over that of a standard card holder with a $4,000 limit.

There are added bonuses to having a credit card linked to a rewards program but there are also pitfalls. If you do not pay off your monthly balance on your credit card then opt for a card with cheaper interest rates as the card’s that are linked to schemes often charge you higher rates to cover the costs of the bonuses, and when you consider the 9% interest incurred on a no frills credit card to that of a rewards card at 16% interest it can become costly. Also if you don’t use your credit card frequently there is very little value in it for you because it will take you far too long to accumulate enough points to recoup anything of value.

So what exactly is on offer?

Quantas frequent flyer point redemptions, Velocity rewards for Virgin Blue flights, car hire, world travel, wines, computers, DVD players, coffee makers, cinema passes, hotel and restaurant credit and a plethora of household goods, entertainment packages and luxury items. And, if you choose to you can even use your points to pay off your credit card balance or pay your annual fee.

Best of all, redeeming points is as simple as calling a hotline or logging onto an online account and typing in a redemption code, with your goods being shipped within 24-48 hours in most cases.

However, before you rush out and sign up for your closest credit card consider and compare interest rates, the rewards offered, the credit card fees charged and just how long it will take you to accumulate enough points to spend.

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