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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02.American Express and Visa/MasterCard

American Express and Visa/MasterCard

You have probably noticed that there are cards featuring the Amex logo along with cards that have the Visa/MasterCard logo. In many cases, banks may offer both an Amex card and a Visa/MasterCard with their rewards program. We refer to these cards as ‘companion cards’. There are some good-value options for those who prefer to use only Visa/MasterCard, but Amex scheme cards almost always earn the most points.

Benefits of companion cards – Having both Visa/MC and Amex means that you can use the Amex card as much as possible (earning more points), but where a fee is charged or Amex is unavailable, you still have the option of using Visa/MC.
Problems with Amex – Amex is less widely accepted than Visa/MC and sometimes you may pay a surcharge to use Amex. It is hard to speculate on how accessible Amex will be for any particular individual. According to the RBA, around two-thirds of large merchants do not surcharge Amex users. Smaller merchants surcharge at an even lower rate. Their data suggests surcharging will increase, though.

Any time you pay a surcharge to use Amex, the additional cost will severely impede any rewards value you earn. In this case, you are usually better to use your Visa or MasterCard option, but unfortunately this again leads you to another Catch 22. Visa/MasterCard rewards cards that are paired with Amex cards typically earn the lowest points (and therefore lowest rewards) of all.

For example, one of the best performing cards we surveyed utilising Amex is, again, the Westpac Altitude Platinum. As mentioned, it will earn over $1000 in flights rewards per annum for those who spend $5000 each month using the Amex scheme card. If you applied that same $5000 monthly spend but only used the Visa card, you would earn a paltry $139 per annum – one of the lowest returns of all cards surveyed at this spend level.

Verdict

Ultimately, if your shopping habits allow you to spend on Amex consistently (over 50%) and without surcharges, then American Express rewards cards can often provide value for you. However, if you can’t put the majority of spending on Amex, look to a dedicated Visa/MasterCard Reward program for the best value.

Points capping and expiry

Rewards can take some time to earn, especially if you are saving to earn a bigger ticket item such as an international flight. It’s important to check whether your chosen program has points that expire, and if they do, be certain to redeem any rewards before this occurs. Points capping may be a concern if you spend a lot, so if this is the case, make sure points caps don’t affect your earning potential.

 

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