66% of Aussies say rewards cards are no longer worth it

With tight travel restrictions in place and flight redemptions temporarily out of the picture, new Mozo research finds that 66% of Aussies believe rewards credit cards just aren’t worth the return anymore.

With no indication as to when international and domestic travel will resume, frequent flyer points have ultimately lost their value in the eyes of consumers. Instead, we’re now seeing many cardholders turn to gift card earnings instead.

According to Mozo’s research however, the average rewards credit cardholder wouldn’t earn enough in gift card rewards to offset the annual card fee. In fact, with an annual spend of $20,000, opting for a gift card return would leave the average cardholder out of pocket by $94, or netting just $34 at best.

“Mozo analysis found that if you’re opting for a gift card return, three times out of four you’re losing money because your annual fee actually outstrips the reward return,” said Mozo Director Kirsty Lamont.

“With higher than average interest rates, annual fees and a reduced ability to use frequent flyer points, credit cardholders need to carefully assess whether their reward card is still delivering value to them.”

After further analysis, Mozo discovered a significant decline in the value of the rewards card. The average rewards card’s net value sat at $126 just five years ago, dropping to $79 in 2019, and now hitting an all-time low of $34 in 2020.

“To be blunt, losing money on your rewards credit card is a bad deal, but many Australians continue to lose out because they don’t review their conditions or their card is simply not tailored to their spending habits,” Lamont said.

“With COVID-19 presenting immense financial strain on many Australians, a rewards credit card may not be suitable for many as they adjust their outgoing expenses.”

The future for frequent flyers

“If you’re dedicated to the idea of interstate travel or international travel down the line - there are still some good rewards credit cards out there, so consider whether your card is delivering what you expected it would,” said Lamont.

“The American Express Qantas Discovery card delivers a net value of $334 annually with no annual fee. HSBC, Macquarie and Qantas all offer cards that exceed $280 in net rewards.”

Mozo also found that top-of-the-line rewards cardholders that hit a hefty $40,000 annual spend could potentially earn $790 in net rewards. Bear in mind that these premium cards come with very high annual fees and typically only benefit those who spend at least $60,000 a year.

To find the right rewards credit card for you, simply crunch the numbers into Mozo’s free Rewards Revealer, which compares over 100 rewards cards based on your individual spending habits and preferred rewards type.