Travel rewards credit cards

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

Travel-rewards

Travel rewards credit cards allow you to earn points towards flights and holidays as you spend – but choose the wrong one and you may find the experience far from rewarding. We sized up the major card loyalty programs and found:

  • on average, spending around $1000 a month on your card will cost more in fees than you earn in rewards;
  • there are some good-value products available, but you must choose carefully and pay the balance in full each month.

In this podcast, Brendan Mays tells you how to get the best value out of rewards cards while avoiding the pitfalls, or you can check out our Rewards Credit Card Guide.  

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Getting the best value

CHOICE looked at 40 credit card programs (63 cards in total) offering travel rewards or partnered to an airline’s frequent traveller program, and then calculated rewards based on three monthly spend levels: $1000, $2500 and $5000. There are all sorts of goodies on offer – from local and international travel to vouchers and accommodation – but not all cards will deliver for all users.

Low spenders

For those spending around $1000 a month, your card can actually cost more in annual fees than you’ll earn in rewards, but don’t despair – there are decent value options even for low spenders with the new Virgin Flyer and Jetstar cards. If you regularly rack up around $2500 per month, the rewards potential increases, but you still need to choose carefully to earn enough rewards to make it worth your while.

High spenders

High spenders stand to gain the most, as long as you don’t mind spending with Amex instead of Visa or MasterCard. However, if you can’t pay your balance in full each month, our advice is to forget about rewards cards altogether and opt for a no-frills, low-interest credit card instead. If you want to know more about the basics of rewards credit cards, and best ways to gain the most value for them, check out our rewards credit card guide.

Worth considering?

While Qantas Frequent Flyer and Velocity lead the way, some alternative airline reward schemes have broken into the mainstream market. The Kris Flyer program of Singapore Airlines (voted number one airline in our 2010 international airline satisfaction survey) is the most prominent and featured on 14 of the 40 programs surveyed, including two dedicated Singapore Airlines cards from Westpac. The Citibank Emirates platinum card, which links you directly with the airline’s Skywards program, is another noteworthy addition.

While the cards may be appealing for Emirates and Singapore Air faithfuls, neither program offers much in the way of vouchers and both Kris and Skywards points expire within three years, which will challenge those with a lower spend limit.

 
 

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The tables below show which cards offer the best value for different spend levels, as well as the cards to avoid.

Recommended

Virgin Flyer Visa card. For those spending around $1000 a month, the Virgin Flyer card offers great value with its 2-for-1 flight function. Four times a year, any one-way domestic flight is complemented with a second flight free, even before you redeem your points. See the Travel Vouchers table below for more information on the effect of this feature.

Jetstar MasterCard. This performed well in all categories; in particular, the Jetstar Platinum card will return around $450 a year in Jetstar dollars (Travel Vouchers, see vouchers table below) for a $2500 monthly spend, and more than $1000 per annum for a $5000 monthly spend. It’s also a great option for those who prefer MasterCard over Amex.

ANZ Rewards Gold (spend on Amex) is another rewards high-roller, returning $450 for a $2500 monthly spend in Velocity flights value and more than $1000 return in the highest spend category. The only downside to this card is that points expire after three years, so you need to claim any rewards you earn within that period.

Westpac Altitude Platinum card (spend on Amex) also provides good benefits at both $2500 and $5000 spend levels across a range of sample rewards, including returning more than $1000 in Velocity value.

Westpac Earth Platinum card (spend on Amex). Provides the best Qantas Frequent Flyer return across a $2500 spend level with a flights reward value of $357 and a total of $964 return per annum for $5000 monthly spend levels.

Not recommended

For those spending $1000 a month, the average cost was $60. At this spend rate, it shows that the annual fee is often more than the rewards value. The Qantas American Express Ultimate card was one of the worst offenders at an average cost of $262 per annum.

Commonwealth Awards card with Qantas Frequent Flyer option (spend on Amex). At the lower spending level of $1000 a month, this card will return around $20 – low in comparison to other similar cards. Even when spending $5000 a month, this card performs poorly with a $238 return per annum in flights rewards value. While there are other cards that have returned lower values for the monthly spend levels, this card performed poorly no matter how you use it.

Citibank Platinum card. If you spend $12,000 per annum on this card, your wallet will be $134 lighter each year once you deduct the annual fee from any rewards value. If you spend the higher amount of $60,000 annually, you will earn $330 of flights reward value – much lower than many comparable cards. Again, while other cards have produced lower returns at the various surveyed spend levels, this card failed to provide a worthwhile return across all levels. However, it should be mentioned that the Citibank Platinum card offers 3.9% balance transfers for the life of the balance – just don’t use it for its rewards value.

Best and worst

Travel-vouchers

Using the table
See How we analyse for our methodology. * Four standard one-way flights to Brisbane were added to the value of the card to account for the 2-for-1 free flights function. In a best-case scenario, four premium economy flights from Sydney to Perth could be redeemed, making the value much higher, but the function could also be used to buy four sale flights, which would lower the dollar value. 
(A) More than one card offered with program. Spend shown calculated using Amex-function credit card.

  • Choosing flight vouchers instead of directly redeeming airfares may enable you to access the heavily discounted sale fares frequently on offer. However, be wary of voucher expiry dates and make sure you can use the total value of the voucher. Not all programs will offer the vouchers you may want; the Qantas Frequent Flyer (QFF) program does not offer flight-only vouchers at all.

new_table

Using the table
All figures listed are chosen Best and Worst Buys. A blank figure indicates that the card is neither a Best nor Worst Buy in that category. The full table is also available. See How we analyse for our methodology and flight samples. 
(V) Velocity Rewards partner card; all other cards are linked to Qantas Frequent Flyer.

03.Full table for flights rewards value

 

Here are the full flights values for all cards surveyed.

Blue = Best Buys | Red = Worst Buys

Flights Value table
Company Card and reward program Total Annual Fee Return for monthly spend ($ p.a.)
  $1000 $2500 $5000
Virgin Velocity Amex Visa/MC Amex Visa/MC Amex Visa/MC
American Express Amex Green Card (Enrolled in Ascent) $160 $13.75 - $274.38 - $708.75 -
American Express Amex Gold Card (Enrolled in Ascent) $210 -$36.25 - $224.38 - $658.75 -
American Express Amex Gold Ascent Card $0 $86.88 - $217.19 - $434.38 -
American Express Amex Platinum Credit Card $395 -$134.37 - $256.57 - $908.13 -
ANZ Rewards $89 $65.45 $26.83 $297.11 $200.58 $683.23 $490.17
ANZ Rewards Gold $129 $102.67 -$13.17 $450.17 $160.58 $1029.34 $450.17
Citibank Citibank Silver $89 - $26.83 - $200.58 - $297.11
Citibank Citibank Gold $149 - -$33.17 - $140.58 - $430.17
Citibank Citibank Platinum $250 - -$134.17 - $39.58 - $329.17
Commonwealth Bank Commonwealth Awards $89 $41.31 -$2.12 $236.78 $128.19 $272.98 $272.98
Commonwealth Bank Commonwealth Awards Gold $144 $29.75 -$57.12 $290.38 $73.19 $561.86 $290.38
Commonwealth Bank Commonwealth Awards Platinum $280 -$19.37 -$193.12 $371.57 -$62.81 $878.34 $154.38
NAB Velocity Rewards $65 $65.31 $21.88 $260.78 $152.19 $586.57 $369.38
NAB Velocity Rewards Gold $150 $23.75 -$63.12 $284.38 $67.19 $718.75 $284.38
Virgin Money Virgin Flyer $95 - $74.75 - $248.5 - $465.69
Westpac Altitude Rewards $100 $73.75 -$13.12 $334.38 $117.19 $768.75 $334.38
Westpac Altitude Gold Rewards $150 $23.75 -$63.12 $284.38 $67.19 $718.75 $284.38
Westpac Altitude Platinum Rewards $295 -$34.37 -$208.12 $356.57 -$77.81 $1008.13 $139.38
Company Card and reward program Total Annual Fee Return for monthly spend ($ p.a.)
  $1000 $2500 $5000
Qantas Frequent Flyer Amex Visa/MC Amex Visa/MC Amex Visa/MC
American Express Qantas American Express Card $149 $12.85 - $255.63 - $660.25 -
American Express Qantas American Express Premium $249 -$46.69 - $256.78 - $762.56 -
American Express Qantas American Express Ultimate Card $450 -$207.23 - $156.94 - $763.88 -
ANZ Qantas Frequent Flyer Standard $95 $66.85 -$14.08 $309.63 $107.31 $714.25 $309.63
ANZ Qantas Frequent Flyer Gold $195 $7.31 -$114.08 $310.78 $7.31 $816.56 $209.63
ANZ Qantas Frequent Flyer Platinum $295 -$52.23 -$214.08 $311.94 -$92.69 $918.88 $109.63
Citibank Citibank Rewards Platinum (QFF option) $299 - -$137.15 - $105.63 - $510.25
Commonwealth Bank Commonwealth Awards with QFF option $99 $22.39 -$18.08 $170.75 $103.31 $238.19 $103.31
Commonwealth Bank Commonwealth Awards Gold with QFF option $154 $7.85 -$73.08 $250.63 $48.31 $452.94 $250.63
Commonwealth Bank Commonwealth Awards Platinum with QFF option $290 -$47.23 -$209.08 $316.94 -$87.69 $654.13 $114.63
Diners Club (D) Qantas Frequent Flyer $150 $11.85 - $254.63 - $659.25 -
Jetstar (J) Jetstar MasterCard $49 - $71 - $251 - $451
Jetstar (J) Jetstar Platinum MasterCard $149 - $91 - $451 - $1051
NAB Qantas Standard $65 $96.85 $15.93 $218.24 $76.62 $258.7 $96.85
NAB Qantas Gold $145.5 $16.35 -$38.68 $259.13 $121.55 $501.9 $281.78
NAB Qantas Platinum $290 -$47.23 -$183.18 $316.94 -$22.95 $923.88 $244.11
Westpac Earth $75 $86.85 $5.93 $329.63 $127.31 $734.25 $329.63
Westpac Earth Gold $125 $36.85 -$44.08 $279.63 $77.31 $684.25 $279.63
Westpac Earth Platinum $250 -$7.23 -$169.08 $356.94 -$47.69 $963.88 $154.63
Qantas Frequent Flyer Amex Visa/MC Amex Visa/MC Amex Visa/MC

Table notes

Where programs are provided with more than one card, a return for spending on both Amex and Visa/MasterCard options has been calculated. A card may be a Best Buy for Amex and a Worst Buy for Visa/MasterCard. In some cases, the average across all three monthly spend levels was used to calculate a Best Buy or Worst Buy.
Blank spaces (-) represent if a card type was not offered with the program.
No figures have been excluded from this table.
(D) Diner's Club Card function (not Amex).
Total Annual Fee includes any rewards program fees the provider charges, but not charges (if any) to join the accompanying airline loyalty program. This card povides (J) Jetstar vouchers only.

Before signing up for a specific travel rewards card, consider how to gain maximum value from it:

  • Many gold and platinum cards offer instant benefits, such as concierge services, free domestic flights and travel insurance. These also have terms and conditions to consider, but can add real value.
  • Credit card providers often offer more than one card type. Usually, you can get an American Express (Amex)-based card and a Visa or MasterCard. Amex-version cards typically earn more points, but not all vendors accept Amex and still others charge a surcharge on transactions. If you have to pay extra for using Amex, it will lessen the value of the rewards you might receive.
  • Joining an airline’s frequent traveller club is another common requirement of travel rewards cards. Depending on your chosen credit card, this might be free or available at a discount, but in some cases you may have to pay a joining fee. Joining the Qantas Frequent Flyer program currently costs $82.50 unless you join the Woolworths Everyday Rewards program, which waives the fee.
  • Both airline reward programs offer ‘Rewards Seats’ when you want to redeem points for flights. These are offer the best points return value but are generally offered at lower availability, so plan to book ahead and be prepared to be flexible with dates and times. There is also an ‘Any Seat Award’ function that allows you to purchase seats available to the general public. However, this typically costs significantly more.
  • Velocity Rewards seats are often offered at a special rate even further below the regular Rewards points prices thanks to Virgin’s special ‘Go’ fares being available with the program. You still need to be flexible and book ahead, but there is a good chance you can find a seat for even less. Qantas Classic Award seats are fixed, so they do not allow you to access sale fares in the same way.
  • Many programs offer bonus points for shopping with selected partners. This can be a great way to boost your points balance, but be wary of changing your spending habits to earn rewards. Paying more for products or missing out on specials will cost you far greater than any rewards value in the long run.
  • Check out the  rewards credit card user's guide to discover the best ways to use rewards cards and avoid common traps. 

Confusing conversions

Most travel rewards credit cards allow you to earn points in two different ways. You can either link your card directly with an airline’s frequent traveller program, such as Qantas Frequent Flyer, or accumulate points onto the card’s own scheme. While both options provide a range of travel rewards, it’s important to watch how your points are being accumulated and converted.

Take the Commonwealth Awards card with the Qantas Frequent Flyer option, for example. You earn 1.5 Commonwealth Awards points for every $1 spent using the Amex option. This is automatically converted and transferred each month into the QFF program, but the fine print reveals the points only convert at half the rate. In other words, you’re only earning 0.75 QFF points for every dollar spent, which means you have to spend more to earn that reward.

CHOICE believes it’s both confusing and misleading to make the consumer think they’re earning more points than they really are. Whether your chosen card earns 1 or 1000 points per dollar, the points are only as valuable as the rewards you can redeem. So take note of the points cost of a reward and any reductions when converting points to another program.

How we analyse 

We look at the number of points needed for a sample reward and the dollar value of that reward. We then divide the points required by the dollar value, which gives the points value for $1 spent towards a reward. We use that number to compare the return on three monthly spending levels, $1000, $2500 and $5000, then deduct the compulsory annual fees and factor in any points capping or spend hurdles.

Sample rewards

  • Travel voucher: $500 voucher for a range of travel providers, including Flight Centre, WebJet, Harvey World Travel, Qantas Holidays and BlueHolidays.
  • Flights: To determine the value of a rewards flight, we look at standard fare economy return flights (including baggage) to four destinations, over four different periods in the year for both the Qantas Frequent Flyer and Velocity partners (32 flights in total; prices taken from each airline and airline partner’s website both including and excluding taxes). Flights used were Sydney-Brisbane, Melbourne-Auckland, Sydney-Bangkok and Sydney-London.

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