2017 Rewards Card Survey - Key Findings Report

Mozo has completed its Annual Rewards Card Survey for 2017, analysing 122 rewards credit cards to see what kind of value they offer Aussie spenders. And the news is not great for points chasers.

Commenting on the report results, Mozo Director Kirsty Lamont said the trend of declining rewards value has accelerated this year, likely in response to recent RBA regulation changes surrounding interchange fees.

“From about halfway through last year, credit card providers have had to start rethinking their rewards programs, as caps on interchange fees were announced and later started coming into effect,” she said.

“The result appears to be that less and less rewards credit cards out there are offering serious points value for your spend. And that means cardholders need to be more aware than ever of what rewards their plastic has on offer - and be willing to ditch cards that aren’t up to snuff.”

Read on for a full breakdown of Mozo’s findings.

Summary

Here’s a quick overview of the main points you need to know:

• Overall, rewards value has trended steeply downwards, dropping to an average net value of just $27 per year
• There was a 50% increase in the number of cards offering negative value - those with an annual fee higher than the rewards value on offer
• There was a bright spot for spenders in the form of one high performing credit card option which can bag cardholders $390 of rewards point value
• Travel continued to be not only the most popular, but also the best value option for redeeming points

Key findings: What’s a rewards card worth these days?

Rewards value is on a downward slope

The average ‘net’ rewards value spenders are getting from their card has taken a nose dive to just $27 -  a whopping 63% decrease since last year. This is a much sharper decrease than what we saw between 2015 and 2016, when the average rewards value dropped from $88 to $72.

Rewards card average net rewards value

There has also been a downward trend in the number of cards offering decent bang for your rewards buck. This year there were only 32 cards with a net rewards value of $100 or more - down from 47 last year.

And the bad news doesn’t stop there for rewards card buffs. “One of the major things for cardholders to be aware of is that some reward card options actually cost you more in annual fees than you get in rewards value,” said Lamont.

For example, on the card with the highest annual fee around, rewards lovers could be losing $554 every year to a poor points return. But it’s not alone - the number of cards delivering this negative net return has jumped by 50% in the last year, from 30 to 45.

The best value rewards cards

It’s not all doom and gloom for rewards aficionados who know where to look for a good value piece of plastic. In fact, the top ten cards in Mozo’s analysis offer $200 or more in net rewards value.

The American Express Qantas Discovery Card came out in the top spot, with a net rewards value of $390. And while the good news is that this is a slightly higher return than last year (a top value of $387), the other side of the coin is that the gap between it and the next best card has widened. In 2016, there were three cards offering over $300 in net value - this year, the Amex offering was the only one.

The highest points earn rate was 2.5 points per dollar spent, offered on both the Bankwest More World Mastercard, and the Amex companion card of Westpac’s Altitude Black offering.

Top five rewards cards by net rewards value

Every cardholder is different - and so is every rewards card. Our Rewards Revealer tool compares 117 rewards credit cards to find the one that suits each spender’s budget and will bag them the freebies they really want.

Rewards value and annual spend: high rollers come out on top

This year’s data shows yet again that when it comes to earning rewards, big spenders are the real winners. Although the average net value on a $19,000 annual spend is just $27, for those spending $60,000 per year that bumps up to $424. For anyone spending $120,000 in a year, the average rewards value comes to $910.

Rewards value and number of negative value cards by annual spend

“It might seem obvious that the more money you spend on your card, the more points you earn. But the key takeaway from this is that you really do need to be spending a large amount every year in order to get a good return from your rewards plastic,” said Lamont.

“For anyone spending less than $19,000 on their card each year the return could amount to less than $20. At that point, you’ve got to ask yourself if having access to that rewards program is really worth the higher interest and fees that come with it.”

Face off: rewards cards vs non-rewards

It’s no secret that rewards cards are more expensive than a low rate credit card without the bells and whistles - charging higher fees and interest is how the bank covers the cost of the rewards program. But this year Mozo found that not only is rewards value slipping, the cost of keeping a rewards card in your pocket is also on the rise.

The average annual fee for a rewards card rose to $177 in 2017, up from $169 last year. That’s around 4 times higher than the average annual fee on a non-rewards credit card, which is just $45.

“A high annual fee is one of the quickest ways to wipe out the value of your rewards points,” Lamont commented.

Credit card annual fees - 2017

The average purchase rate on a rewards card also rose marginally, up to 19.74% from 19.70% last year, keeping it well above the average for non-rewards options, which actually dropped from 14.41% in 2016, to 14.10% this year.

Credit card interest rates - 2017

“For cardholders who tend to carry a balance from month to month, the cost of interest charges may totally cancel out any value you could be getting from rewards points. In this case, you might be better off opting for a low rate option,” said Lamont.

Redeeming points

Travel rewards continue to be popular for Aussie spenders, with research from Citi showing that airline points make up around 40% of all redemptions. Mozo’s 2017 survey shows that domestic travel is also the top redemption option in terms of value and 9 out of the top 10 rewards credit cards come attached to an airline rewards program.

The average rewards net value when redeeming points for a Sydney to Melbourne flight is $32, and the average spend to snag that flight is around $16,005.

Lamont added that, “Points value is definitely on the decline, but there are other factors to consider - freebies like complimentary travel insurance, free flights or access to airport lounges might also add value to having a rewards credit card.”

“The important thing is to look at the bonuses and rewards on offer, and decide if you’ll personally get enough use out of them to justify the cost of having the card.”

Gift cards and cashback are other popular redemption options, though Mozo’s data shows that the value of points is slipping. In 2016, the most points a cardholder might have to redeem for $100 cashback was 64,000. This year, that number has jumped to 87,400.

On average, rewards card delivered a negative value when redeeming points for a $100 gift card, and the average spend required to snag one is around $25,875.

How did we crunch the numbers

Our Mozo data experts looked at 217 credit cards, including 122 rewards cards in the Mozo 2017 Rewards Card Survey. Mozo analysed the dollar value of flights, cashback and gift rewards, then took the annual fee into account to determine the ‘net’ rewards value of each card.

Unless otherwise stated, this report is based on an annual spend of $19,000. All calculations assume a 100% spend on Amex where possible.

Want to find the best rewards bang for your buck? Head over to our Rewards Revealer tool to compare rewards credit cards and find the perfect fit for your wallet.