07.Value for money?
Do reward credit cards offer value for money?
On average, you need to notch up at least $2000 in purchases per month (the Australian average is about $1200) to get any positive return after deducting the annual fee, which ranges from zero to $900, but the average is $150.
The higher fees for platinum and gold cards mean these are really only suited to above-average spenders. Some of the perks include free travel insurance and better point conversion, unlimited concierge service at hotels and personalised rewards.
Plunging points value
It’s frustrating trying to save your points for more expensive rewards when their value takes a large drop every few years, as David from Sydney found out. Although the reward points earned via his credit card have unlimited life, David says they’re now only worth a fraction of what they were when he first opened the account 14 years ago. At that time, 100,000 points could be redeemed for about $1100 in David Jones vouchers, but now only translate into about $640 of value at the same retailer.
All the credit cards we looked at charge penalty fees for missing the payment due date ($33 on average) and for spending over your card limit ($31 on average).
- The amount of these fees bears no relation to the cost incurred by the financial institution as a result of the consumer’s default. For this reason they may be unlawful as well as unfair.
- Penalty fees have increased far more quickly than inflation.
- Banks could easily help consumers avoid fees by offering credit cards that cannot have their limit exceeded, however, they choose not to.