Rewards credit cards

Compare the best rewards credit cards 2021

Rewards credit cards are the easiest way to get bank rewards, frequent flyer points or cashback as you spend. If you choose a rewards card that best fits with how you spend money – and use it wisely – it can give you a way to get "something for nothing" on purchases you were going to make anyway.

When you get a new rewards credit card, you can usually take advantage of sign-up offers for bonus points when you spend a certain amount. These can give you a huge head start on building your rewards balance. Don't forget to check that when comparing cards.

How do rewards credit cards work?

A rewards credit card earns points for every $1 you spend on purchases in Australia and overseas (including online). The points are credited to your account or a linked loyalty program, where you can redeem them for rewards.

What rewards can you get with a credit card?

Credit card rewards in Australia range from flights and hotel bookings to gift cards, cashback and retail items. While these rewards vary between cards, any of them can help you get more value from your spending.

But rewards credit cards typically charge higher interest rates and annual fees than other types of cards. So you'll get more bang for your buck if you pay your balance in full each statement period (to avoid interest) and if you can earn enough points to outweigh the annual fee.

Types of credit card rewards programs in Australia

There are 4 main reward categories: frequent flyer points, bank rewards points, cashback and retail rewards and supermarket cards. You'll find more details on each of these options below.

Frequent flyer programs

If you're a member of a frequent flyer program, you can use a credit card to earn more points or miles for your existing frequent flyer account. There are two ways you can earn frequent flyer points with a rewards credit card in Australia:

1. Frequent flyer points per $1 spent. These credit cards are directly partnered with a frequent flyer program and earn frequent flyer points on your eligible spending. Points are automatically added to your frequent flyer account once a month (or at regular intervals). In Australia, the main frequent flyer credit cards are linked to Qantas Frequent Flyer, Velocity Frequent Flyer and Emirates Skywards.
2. Transfer credit card rewards to frequent flyer points. A lot of rewards credit cards let you transfer points to partnered frequent flyer programs. This gives you more flexibility if you fly with a number of airlines or don't travel very often. It can also be a good option if you want to earn points with a program that isn't directly linked with an Australian credit card (e.g. Singapore Airlines KrisFlyer). But the number of frequent flyer points you get is usually different to how many credit card points you have. For example, every 2 card points could get you 1 frequent flyer point. This is known as the point transfer or exchange rate and can affect the value you get from your points.

As well as partnerships with frequent flyer programs, many credit card reward programs let you use points for flights, travel upgrades, accommodation, car hire and travel experiences without needing to transfer them first. This can be handy if you want the option of travel rewards but don't want to limit yourself to earning points through just one frequent flyer program.

Bank and credit card rewards programs

Many credit card companies in Australia have their own rewards programs that give you a mix of ways to use points, with rewards such as travel, retail items, gift cards, credit on your account or point transfers to frequent flyer and other loyalty programs. The credit card rewards programs you can choose from include the following:

Cashback credit cards

These credit cards give you a way to get cash rewards for your spending, either in the form of credit back on your account or vouchers you can spend.

Some cashback credit cards give you a set percentage of your regular spending as cash back on your account, while other cards come with introductory offers that provide a one-time account credit or voucher when you meet the spend requirements.

Retail and supermarket rewards credit cards

These rewards credit cards offer you points, discounts and other perks when you shop with a particular supermarket or major retailer, such as Coles, Woolworths, Kogan or David Jones. But you can still use them for spending at other shops and businesses (just like any other credit card). The following table gives you some examples of how these cards work.

Retailer	Credit cards	Rewards
	David Jones American Express & David Jones American Express Platinum Card	Earn American Express Membership Rewards or Qantas Points for purchases in David Jones and everywhere else. You can also enjoy exclusive shopping benefits at David Jones, such as complimentary delivery and interest-free plans for eligible purchases. The platinum card also offers complimentary travel insurance and airport lounge access.
	Coles No Annual Fee, Coles Rewards Mastercard & Coles Low Rate Mastercard	The Coles No Annual Fee and Rewards Mastercard both earn Flybuys points at Coles Supermarkets and everywhere else. The Coles Low Rate Mastercard offers points per $1 spent at Coles Supermarkets (on top of your regular Flybuys points). These credit cards also include your Flybuys membership barcode on the back, so you won't have to pull out your Flybuys card when you're shopping at Coles or another Flybuys partner.
	Woolworths Everyday Platinum	Earn points on your credit card spending, which are then converted to Woolworths Shopping Cards every four months. Other benefits include 10% off your shop at Woolworths once per month and details for your Everyday Rewards membership on the back of the card.
	Kogan Money Black Card	Earns Kogan rewards points per $1 spent, which you can use to pay for Kogan.com purchases or for payments to your card. Another benefit is complimentary Kogan First Membership (usually $99), which gives you access to membership deals, free delivery on selected purchases and other perks.

If you regularly pay for your groceries on plastic or shop with a particular store or brand, you can learn more about credit cards linked with shopping loyalty programs in Finder's guide to retail rewards credit cards.

Pros and cons of rewards credit cards

With so many rewards credit cards to choose from, it's wise to think about how you would use one, what rewards you'd get the most value from and your overall financial situation. Then you can weigh up the other benefits, costs and features to help you find the right rewards card for you.

Promoted

Citi Premier Card

130,000 bonus points when you spend $4,000 in the first 90 days. $150 annual fee in the first year and each subsequent year when you spend $48,000 in the previous year.

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How to compare rewards credit cards in Australia

From earning points to the rewards you want to redeem, here are some of the questions and factors to think about when you're comparing rewards credit cards:

How can I earn points?

• Bonus point offers. Rewards credit cards that offer bonus points for new cardholders give you a simple way to boost your point balance, but take note of the offer details before you apply. Usually, you need to meet a spend requirement in a set period of time to score bonus points. So make sure that this requirement fits with your budget.
• Points per dollar. Also known as the earn rate, this is how many points you'll earn for your spending. The higher the better, but a card that offers at least 1 point per $1 on eligible transactions could be considered good value.
• Point expiry and caps. Some credit card reward points expire after a certain amount of time and some have a limit on how many points you can earn in a month or year. Make sure these restrictions don't limit you by looking for cards that have an expiry that fits with your goals and a points cap that is higher than what you usually spend.

What's the value of the rewards?

• Point values. To work out the value of your rewards, consider how many points you would need to redeem for a specific reward. For example, let's say you need 12,000 points to get a $50 gift card and your credit card has an earn rate of 1 point per $1 spent. You would need to spend $12,000 before you could redeem the $50 gift card. Breaking down the rewards like this can help you determine whether it's worth your time and money.
• Rewards partners. Rewards programs often partner with retailers and businesses to give you more ways to use your points. You may also have the opportunity to earn bonus points when you shop with partner stores. Look for a credit card rewards program that has partnerships with your favourite brands and products so you can take advantage of these options.
• Redemption limitations. Some rewards programs have blackout periods when you may not be able to make redemptions, or limits on items in the rewards store. Check the fine print for this information and consider the impact it could have on you.

Example: Is the Amex Platinum Edge worth it?

The American Express Platinum Edge sports an annual fee of $195. To make this card worth it, you'd have to take advantage of enough of the card's perks and features to outweigh this $195 fee in value. Here are a few ways to get that value.

Based on the average Australian credit card spend, you can get an additional $200 worth of value out of the Membership Rewards points earned. However, you should calculate your own rewards potential based on how much you usually spend each month.

For this example, we've also outlined the maximum claim amount of all the insurance covers and you should factor in any potential value based on your personal circumstances.

What are the costs?

• Annual fees. Most rewards credit cards charge an annual fee. The value of the rewards you redeem should be higher than the cost of the annual fee to make it worthwhile. You can also compare rewards credit cards that offer no annual fee – just remember to check if the annual fee is waived in the first year or $0 for life.
• Purchase interest rates. Rewards credit cards often have high standard interest rates on purchases. Credit cards that offer interest-free days give you a way to avoid interest charges on your purchases, but usually only if you pay your balance in full by the due date on each statement. If you think you'll carry a balance, factor in the cost of interest when you're looking at how much value you'll get from the card. If the interest ends up costing you more, you could check out low-rate credit cards instead.
• Foreign transaction fees. Many credit cards charge a fee for transactions made overseas or with an international retailer online. This is usually 2-3.5% of the total transaction. If you're planning to use a rewards card for travel or to shop online with businesses based overseas, make sure you look at this fee before choosing a card – especially for any card that offers more points for foreign transactions. You can compare cards with no foreign transaction fees in this guide.
• Balance transfer interest rates. Some rewards credit cards also come with 0% balance transfer offers, but you won't earn points for any balance that you transfer to the new card. Plus, any new purchases will attract the card's purchase interest rate. If you have credit card debt that's collecting interest, think about paying it off completely before you look at a rewards card.
• Cash advance interest rates. If you use a rewards credit card for a cash advance transaction, such as getting money from an ATM, you will be charged interest at the cash advance rate. This rate could be as high as 22% p.a. Cash advances usually don't earn reward points either.

Are there any complimentary extras?

Rewards credit cards often come with a variety of additional features that can add value to the account you choose. Popular perks include the following:

Rewards programs give you a way to get extra value from paying with a credit card – but you need to look at the costs as well as the perks to decide if a rewards credit card is worth it. So, if you're interested in earning points, cashback or other rewards as you spend want a rewards card, you can start by comparing a range of credit cards based on the rewards program, sign-up bonus point offers, costs and your spending habits. You can then read reviews of individual cards, check your eligibility and apply for a card that fits your needs.

Frequently asked questions about rewards cards