Rewards credit cards - a user's guide

Discover how to make the most of your rewards card and avoid the hidden traps.
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03.Airline loyalty programs

Airline loyalty programs

Rewards credit cards are often linked to airline loyalty programs, which also offer vouchers and merchandise as well as flights rewards. Some cards deposit points directly into an airline’s program, and others simply allow you to transfer points at a time of your choosing. Depending on your card, membership to an airline loyalty program may be included, or you may have the choice on whether to join a program or not.

For those interested in travel rewards, it’s likely that you will need to join an airline’s program. The program you choose can also affect the value you gain from a rewards credit card, so make sure you choose the right program to suit your needs (see below for more information on the two leading programs in Australia).

Converting points

Occasionally, you may need to convert your points between programs. As mentioned, this commonly occurs when you earn points with your credit card program but then need to transfer those points an airline loyalty program. For example, if you earn ANZ Rewards points, you have the option to transfer your points into the Velocity program (linked to Virgin) where you can redeem those points for Velocity rewards, such as flights.

Often, points are converted at different ratios, and naturally, this can become quite confusing. Make sure you understand the ratio your chosen program uses when converting points. You can then accurately calculate how much you really need to spend before earning a particular reward of your choice.

Qantas Frequent Flyer and Velocity

The two major airline loyalty schemes on offer in Australia are the Qantas Frequent Flyer program and the Velocity program. If you have a preference for either airline or its partners (see each program’s website for a list), then choosing a program is probably an easy decision. However, if you are interested in each program from a value perspective, there are some notable details to consider.

The primary concern is the number of points needed to redeem flights, which brings us to the issue of ‘Rewards’ seats.

Rewards seats explained

When the time comes to redeem points, you have two options to book your airline seat. The first option is to book a Rewards seat, which the airline will have allocated for this purpose (Qantas calls them Classic Awards seats while Velocity users know them simply as Rewards seats), and the second option is to book with a function called ‘Any Seat’.

Rewards seats typically provide the best value but are offered at lower availability and in fewer time slots. In effect, this means you must be flexible with the date and time that you fly, and it’s highly advisable to book in advance to secure the seat you want. As the name suggests, ‘Any Seat’ allows you to book seats that are available to the general public, but these generally cost significantly more.

Here is where it becomes interesting from a value perspective. The points required to book a Qantas Classic Awards seat are largely fixed (using the Qantas website’s points calculator will display exact figures for your chosen destination). However, with Velocity Rewards seats, the points needed to make a booking are flexible, which means often seats are available for less than shown on the Velocity points calculator (available on the Velocity website). Velocity members can see the lower points cost of seats for themselves by logging into their Velocity account and using the ‘Find Rewards Flights’ feature.

When we asked Virgin about this, they informed us that around one third of their sale fares (called ‘Go’ fares) are available as Rewards seats. In practice, this often translates to fewer points needed to redeem flights, and better value for you.

Joining fees

While the Velocity program is free to join, the Qantas Frequent Flyer program currently charges an $82.50 joining fee. However, it’s important to point out that many rewards credit cards will waive that $82.50 fee just for being a cardholder, and for those that are faced with the joining fee, there is an easy solution.

By joining the Woolworths Everyday Rewards program (free), you can automatically become a member of Qantas Frequent Flyer. You can see our article on shopping loyalty cards for a review of the Woolworths program, but other factors aside, it is a simple way to waive the joining fee.


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