The difference between scoring $400 of rewards value and just $21 is in your hands
The thrill of chasing rewards points still appeals to Aussie spenders, despite plummeting returns and high annual fees. But the good news is, Mozo research has revealed that there is a way to earn hundreds of dollars of rewards value each year - and it’s all about choosing the right rewards credit card.
On the whole, the rewards card situation looks pretty grim: the average return has dropped a steep 70% over the past two years, to a point where a typical cardholder spending $20,000 on their plastic each year will earn just $21 of rewards value.
“Credit card providers do a good job of marketing rewards cards with promises of island getaways, iPads and toasters – and we’re buying it. 4 in 10 Aussies still have at least one rewards credit card in their wallet,” said Mozo Director, Kirsty Lamont.
“Unfortunately, high fees and plummeting rewards value mean the average rewards card holder is only earning the equivalent of an adult movie ticket every year.”
Annual fees eating into rewards card value
One of the major factors dragging the value of rewards credit cards down was the sky high annual fee many of these cards come with. In fact, the average annual fee on a rewards card was revealed to be $182 - almost four times the average annual fee of a non-rewards piece of plastic.
Mozo’s research found that for an average spender, the annual fee outweighed the value of the rewards on offer with 1 in 3 rewards cards.
“The message for cardholders is clear – if you aren’t a big spender, it’s time to review the value your rewards card is really delivering,” Lamont said.
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Are rewards cards worth it? For some people, yes
But despite the gloomy outlook, it’s not all bad news as there are still a number of rewards credit cards offering up bumper bang for your buck. Lamont pointed out that by shopping around for a better value rewards card, a spender could potentially earn over $400 worth of real rewards value each year - almost 20 times the average return of $21.
The key is choosing the right card and then using it properly. For example, the American Express Qantas Discovery Card came out on top in terms of value for the average credit card spender. It served up $405 worth of rewards value each year, helped along by having no annual fee and uncapped 1 point per $1 earn rate.
“If you put the effort into earning and then redeeming rewards points, then it only makes sense to also put the effort into finding the credit card that offers up the best value. That should really be step one,” Lamont said.
Top value rewards credit cards
| Rewards credit card | Annual fee | Net value |
|---|---|---|
| American Express Qantas Discovery Card | $0 | $405 |
| HSBC Premier World Mastercard (Qantas Frequent Flyer) | $99 | $306 |
| American Express Velocity Escape Card | $0 | $287 |
| American Express Qantas Premium Card | $249 | $257 |
| Qantas Money Qantas Premium Everyday Credit Card | $49 ($0 in the first year) | $255 |
So if you’re keen to find the best bang for your buck, head over to our Rewards Revealer tool. It crunches the numbers to help you find the rewards credit cards with the best points return for your spend and the best part is it’s quick, simple and free to use.
Information correct as at 14 September 2018. ‘Net’ value is derived by calculating how many points would be earned based on an average annual domestic spend of $20,000, then calculating how many Syd-Mel return flights can be redeemed using these points. We then calculated the value of these reward flights based on the airline carrier and after deducting the ongoing annual fee arrived at a net rewards value.