Card programs not so rewarding


CHOICE rewards survey finds no such thing as a free lunch

Rewards cards offer all sorts of enticements such as hotel accommodation and air travel, but a CHOICE survey has found unless you choose the right program for your spending habits, you may find the only thing taking off is the balance on your card.

Spend less than a thousand dollars a month and there's a good chance your annual card fee will cost more than any reward value. Fail to pay your card balance in full every month and interest costs and fees can also wipe out any potential rewards.

"Choosing the wrong program could mean you will find your credit card experience is far from rewarding," says CHOICE spokesman Christopher Zinn.

"Consumers are seduced by the promise of all sorts of goodies but we found unless you're spending more than $1000 a month on your card, it can take on average over seven years just to earn a $500 travel voucher."

CHOICE calculated the travel rewards of 40 credit card programs based on three monthly spend levels of $1000, $2500 and $5000.

For low spenders, the arrival of the Virgin Flyer and Jetstar cards on the market have provided some of the best value options, including 2-for-one flight rewards with the Virgin Visa card.

"On the other hand the Qantas American Express Ultimate card is one of the worst offenders for low spenders. The annual fee of $450 more than takes care of the $250 rewards value you get," says Zinn.

The Citibank Platinum card (Visa or MasterCard) was another that performed poorly no matter the spending level. In fact spend $30,000 over the course of a year and you'll receive barely $40 in rewards after paying the annual fee.

According to the survey, the Jetstar MasterCard performed well in all spending categories, while both the Jestar Platinum card and ANZ Rewards Gold Amex rated highly for spending $5000 a month, providing rewards of more than $1000.

"The only downside with the ANZ Rewards Gold card is that points expire after three years so make sure you redeem your rewards in time.

"There are some good value cards out there but you must choose carefully and for those who can't pay their balances in full each month you’re better off going for a credit card with a low interest rate. The rewards may be smaller but you'll save money in the long run," says Zinn.

To view the survey in full go to: www.choice.com.au/rewards

Related articles

Related tags:
 
 

Travel rewards credit cards

CHOICE identifies the cards that offer the best value for your spending levels.

6 Oct 2010 | Choose the wrong card and any potential reward can be quickly wiped out in expenses.

Reward cards review 2009

CHOICE crunches the numbers to find the most rewarding cards for frequent flyer, shopping and cash rewards.

19 Mar 2009 | We analysed 63 reward credit and charge cards, looking at frequent flyer points, shopping vouchers and cash rewards.

 
 
Learn more
 

Sign up to our free
e-Newsletter

Receive FREE email updates of our latest tests, consumer news and CHOICE marketing promotions.