Rewards credit cards: Millennials shop around for a better program
It’s out with the old and in with the new for Aussie Millennial rewards credit card customers.
This is according to a recent study by data analytics and consumer intelligence company, J.D. Power.
In a new report, they found that 9% of Millennials have switched credit cards over the past year while 22% intend to ditch their current plastic for something fresher in the next 12 months. This is more than double that of older credit card customers (4% and 11%, respectively).
But why are Millennials looking for something new?
It’s all in the rewards.
Since the COVID-19 pandemic began, J.D. Power found that 48% of Millennials have been spending less on their credit card. While 18% claim the overall value of their card has decreased. In fact, recent Mozo data shows that not only Millennials but 66% of all Aussies say rewards cards are no longer worth it.
However, Millennials haven’t given up hope. 29% of young Aussies are on the hunt for a better rewards program and a further 29% are looking for more benefits.
“Millennials are savvy and are shopping around for a card that offers a better rewards program that suits their changed spending habits,” said Bronwyn Gill, head of banking and payments intelligence at J.D. Power Australia.
“Card issuers must offer reward programs that are relevant to Millennials, or risk losing longer-term relationships with this important age group.”
What type of rewards do millennials like?
According to the recent J.D. Power stats, the main reason Millennials opt for credit cards is out of convenience (56%). However, the second most common reason is to earn rewards (42%) and there are a few specific things that young customers are looking for.
Millennials value cashback, gift cards and vouchers, airline miles, airline tickets and fuel rebates the most when choosing a rewards credit card.
“Rewards programs are key for Millennials,” said Gill.
“After convenience, earning rewards is the second most important reason as to why Millennials use their credit card, however new spending habits are directly influencing the ability to accumulate and redeem rewards.”
Things to consider when switching credit cards
The truth is, changing credit cards isn’t as simple as finding a rewards program you like and then jumping ship. There are a few important things you need to consider.
Fees: Compare the fees between your current card and the new card. This includes the annual fee, cash advance fee, late payment fee and foreign exchange charge. While a rewards program may seem great, if the fees outweigh what’s on offer you could end up in a worse position than you are in now.
Interest rates: According to the Mozo database, credit card interest rates can range anywhere from a low 7.49% all the way up to 24.99%. And the reality is that a lot of rewards credit cards come with higher interest rates. So, if you are sacrificing a low interest rate for a better rewards program you must ensure you pay down your balance in full month to month (to avoid hefty interest repayments). However, if you tend to only pay the minimum repayment amount each month, opting for a rewards credit card with a high interest rate may end up costing you more over time.
Rewards and bonus points offers: It’s crucial to get all the information you need about a particular rewards program before signing up. Consider things like points earnings (how many points you receive for every dollar you spend), rewards program type, what you can spend your points on, extra perks etc. Also remember to check out what bonus points offers are around, as they can be a good way to rack up points early on. Just bear in mind, these offers generally come with spending requirements so only sign up if you intend or regularly spend the amount required (don’t force yourself to spend more just to gain bonus points).
Compare Rewards Credit Cards 2020 - page last updated October 24, 2020
American Express Qantas Discovery Card
American Express Qantas Discovery CardDetails
Westpac Altitude Platinum
Westpac Altitude PlatinumDetails
Qantas Money Qantas Premier Platinum
Qantas Money Qantas Premier PlatinumDetails
Bankwest Qantas Platinum Mastercard
Bankwest Qantas Platinum MastercardDetails
St.George Amplify Platinum
St.George Amplify PlatinumDetails
Suncorp Clear Options Platinum
Suncorp Clear Options PlatinumDetails
NOTE: It’s also important to keep in mind that when switching to a new credit card you are likely to face some new conditions, such as income requirements or credit history checks. This may affect your ability to apply for a particular rewards credit card or determine the credit limit you are able to have.
Want to start your search for your new rewards card? Take a look at the killer options below or jump over to our rewards credit cards comparison table.
^See information about the Mozo Experts Choice Rewards Credit Cards Awards
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