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Earning reward points

Reward points are a handy way that cardholders can gain perks, such as electronics and gift cards or frequent flyer travel rewards, from everyday purchases. 

There are a few ways you can earn points, and some tricks and traps to keep in mind.

Points per dollar spent

The main way to gain reward points on your credit card is by spending money. Rewards credit cards typically allow you to earn points per dollar (or more) spent. This is called the earn rate of a credit card and an important part of choosing your rewards card.

Bonus points

Credit card providers will often offer new customers bonus sign-up - or ‘introductory’ - points. These can be in the tens of thousands to hundreds of thousands range, depending on the credit card.

To earn these bonus points, you typically need to meet certain eligibility criteria after you sign up. This could mean spending $1,000 in your first month of having the card, for example. Before you choose a credit card with introductory points, ensure you can afford to meet any bonus points requirements.

Affiliated store spending

Some credit cards may reward you with additional bonus points if you spend money in an affiliated store (online or in-store). Check out your credit card provider’s list of bonus points-affiliated stores before applying.

Points cap and expiry

Some credit card providers will put a cap on the number of points you can earn in a certain time frame. Some will also implement points expiry dates so that if you haven’t spent your points, they will expire

Types of rewards credit cards

There are a few types of reward points that you can earn and that can be exchanged for perks and bonuses. The type of reward points credit card you choose will depend on the type of rewards you want to earn.

Standard reward credit cards

Credit card companies often come with their own branded reward programs. The credit card you take out will be linked to an internal rewards program that is typically accessed online.

Your reward points may be exchanged for goods such as appliances and electronics or even gift cards for affiliated stores. The types of rewards you can earn depend on the stores that partner with your chosen credit card provider.

Frequent flyer credit cards

Instead of earning reward points per dollar spent, spending with these types of credit cards may earn you frequent flyer points towards an affiliated airline.

The main airlines with affiliated frequent flyer credit cards in Australia may include:

AirlineProgram Name
QantasQantas Frequent Flyer
JetstarJetstar Dollars
Virgin AustraliaVelocity Frequent Flyer

Retail rewards credit cards

It’s not just the big four banks offering credit card reward programs nowadays. You can also find rewards credit cards from major Australian retailers, such as Woolworths, Coles, Myer and David Jones.

These credit cards allow you to earn reward points that can be used in reward programs specifically linked to said retailer. Points may be exchanged for perks such as discounts on purchases and gift cards.  

Cashback credit cards

Not in the market for a new blender? Perhaps you’re after a card that gives you back cold hard cash.

Some credit card providers offer customers rewards in the form of credit or ‘cashback’ to your account. Typically, cashback credit cards require users to meet certain spending requirements. The card provider then may give you a percentage of your total spending back, generally to a capped dollar limit.

For example, a cashback rewards credit card may offer customers 10 per cent back on eligible purchases, capped at $100 per month. This means the customer would get $10 back in their account just for using the rewards card at checkout.

Perks and protections

There are a range of rewards credit card perks and protections that your card provider may offer you. 

Reward credit card perks

Airport LoungeAccess to airport lounges, such as Qantas Airport Lounge, Business Class Lounges etc.
ConciergeA concierge service may be able to assist in organising travel arrangements, dining, entertainment and much more for card customers.
Discounted Annual FeeSave on ongoing costs by paying a lower annual fee for a set period of time.
Free Supplementary CardsAdditional cards available for no extra charge.
Partner DiscountsYou may be eligible for discounts from partnered brands, including fashion, dining, movies and more.
Special EventsCardholders may gain exclusive access to special events, as well as access to lounges.
VIP SeatingEligibility for VIP seating or packages for special events.
Reward PointsDollars spent typically earn you reward points that can be exchanged in reward programs for things like home goods, electronics and gift cards.

Reward credit card protections

Fraud ProtectionProtects you from losing money in the event of fraudulent transactions on your credit card.
Free Domestic Travel InsuranceEntitles you to a level of insurance cover when travelling domestically in Australia. Can include luggage cover, cancellation fees, personal liability cover and much more.
Free International Travel InsuranceEntitles you to a level of insurance cover when travelling internationally. Can include luggage cover, medical insurance, rental car insurance and more.
Extended WarrantyAn additional insurance that extends the manufacturer or retailer’s warranty on your purchases.
Purchase Protection InsuranceProtects you against loss, theft or accidental damage to purchased goods.
Rental Car Excess InsuranceCovers rental car excess costs in the event of accidents or other issues.
Transit Accident InsuranceCovers yourself or your family in the event of an accident or death while in transit (buses, trains, planes etc.), or while boarding or alighting.
Guaranteed Pricing SchemeIf you find a cheaper price for something you’ve already purchased using your credit card, Guaranteed Pricing Scheme works by paying the difference.

Costs of rewards cards

There are some general costs associated with rewards credit cards that you’ll need to weigh up against your budget before applying for one.

Annual fees

Rewards credit cards can come with some of the highest annual fees on the market. It’s generally accepted that annual fees help to pay for reward programs.

However, there are some rewards credit cards that don’t charge an annual fee. When shopping around for a rewards credit card, keep an eye out for this cost and how it may factor into your budget before applying. 

Purchase rates

Reward credit cards operate like any other credit card, in that you may be charged interest on purchases made if you don’t pay off your balance each payment cycle.

This card type may come with moderate to high interest rates. If you’re the kind of person who struggles to pay off their outstanding balance, please weigh up whether this type of credit card is right for you and consider shopping around for low-rate reward option.

Overseas fees and costs

Whether you’re using your credit card on holidays or shopping internationally online, you may be charged one or more fees on your purchase.

These may include:

  • Currency conversion fees
  • Foreign transaction fees
  • ATM withdrawal costs (cash advance)
  • Charges from the foreign ATM provider
  • Charges from Mastercard or Visa on top of those from your provider

How to choose a rewards credit card

Choosing the right rewards card is a personal decision that will depend on the type of rewards you want as well as your budget and spending.

There are a few things you can review to help choose a rewards credit card.

Program type

Are you an avid traveller? A shop-a-holic? The type of rewards program you want will be up to your own preferences. 

These are some of the benefits and perks of the different reward programs. Depending on the credit card provider, some rewards may cross over various programs and be accessible for all programs.

Rewards program typeBenefits and perks
Standard rewardsReward points, reward programs: access to appliances, merchandise, gift cards and more.
Flights rewardsDiscounted flights, hotel bookings, flight upgrades, baggage upgrades and priority delivery, extended warranty, airport lounge access, free concierge, free domestic travel insurance, free international travel insurance, rental car excess insurance.
Retail rewardsReward points to be redeemed in a particular retail stores and/or supermarkets.
Cashback rewardsRefund on a percentage of what you’ve spent (may be capped).

Points per dollar spent

Each credit card has its own earn rate, but keep in mind that not all earn rates are created equally.

If one card is offering 3 points per dollar spent and another is offering 1, it doesn’t necessarily mean the latter option is worse. It all depends on the value of the rewards being offered. A standard reward points card may see you earning fewer points per dollar than a platinum rewards card, but the value of the rewards in this program may be worth much less. Meaning, you may not need to spend as many reward points to obtain a new toaster in this rewards program, for example.  

An easy rule of thumb is to look at the time and costs involved with obtaining rewards. Look at your budget and how much you’ll likely spend on your credit card. Then calculate the type of rewards you’re likely to want. If it’s going to take you, say, five years to earn enough reward points for a new microwave, and you’re paying a high annual fee each year, you may need to ask yourself if the rewards are worth what you’re paying for it.

Bonus reward points

Some credit card providers offer customers complimentary bonus reward points on sign up. This can be a helpful incentive to get customers over the line and for customers to spend on big rewards. For example, some introductory point offers on frequent flyer cards may be the value of a flight from Sydney to Melbourne, making them an enticing option.

Points caps and expiries

Some credit card providers put a cap on the number of points you can earn each statement period. They may also put an expiry date on the reward points you’ve earned if you’ve not spent them in a certain period of time. This may be something you want to avoid if you’re hoping to get the greatest value from your rewards program.

How to use rewards

One of the best ways to understand how useful credit card reward programs may be is to explore how they can be used in real life. Below are a few hypothetical examples of how reward credit cards may be used.

Ways to use reward programs 

You’re a rabid points-chaser and use your credit card for everything from groceries to your daily coffee to earn as many as possible. Once in a while you know you can treat yourself to something small, like a gift card, or save up for a bigger item, like a new appliance, because of how many points you earn.

You hop onto your credit card’s website and log into the reward program. You then redeem $10,000 reward points for a $50 David Jones gift card. Once you confirm the reward, you then complete your redemption online and head over to the retailer for a well-earned shopping trip.

Ways to use frequent flyer rewards

You’ve decided to go on a holiday with your partner. You signed up with a new credit card a few months ago and earned 50,000 bonus points with your favourite airline. You buy your plane tickets and use some of those bonus points to upgrade your seats from economy to business class. As your credit card is affiliated with the airline you’re flying with, you also get access to the airport lounge. 

Unfortunately, when you arrive at your destination you discover your luggage has gone missing. Thankfully you remember your credit card comes with travel insurance. You discover you are insured for up to $20,000 for events like missing baggage and flight cancellations. Depending on the insurer, you may need to have the original receipts for your missing items, as well as file a report within 24 hours.

While on your trip, your partner falls over and sprains their ankle. You remember that your credit card insurance also covers medical. As it is not a pre-existing condition, your insurer helps to cover the medical bills.

Ways to use retail rewards

You’ve been a shopper at a specific grocery store your entire life. Now you have a big family, you find yourself at the grocery store at least twice a week. You choose to get a retail credit card linked to this grocery store.

For every dollar spent at your grocery store, you earn points towards its rewards program. One a month, you’re able to exchange some of these points for money off of your grocery shopping. This has saved you hundreds of dollars over the years, which can be better spent on things like your energy bill or a day trip with the family.