Rewards credit cards vs annual fees

Is the annual fee of a rewards credit card worth it? The answer to this question will vary from one person to another as it depends on several factors which we will go through in this guide. So before you sign your life away to a flash rewards credit card take the time to learn if it’s the best piece of plastic for you.

Want some of the best rewards deals available? Compare below. - last updated February 28, 2021

Search promoted rewards credit cards below or do a full Mozo database search. Advertiser disclosure.
  • St.George Amplify Signature

    Earn up to 200,000 Bonus Amplify Rewards Points over 2 years (130k yr 1, 70k yr 2) when you spend $12k on eligible purchases each year. $139 reduced first year annual card fee (normally $279). New cards only, Eligibility criteria and T&Cs apply. Offer ends March 2nd 2021.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Amplify Rewards
    $279 $139 in the first year
    200,000
    1.5 points uncapped
    Compare
    Details
  • Mozo Experts Choice 2020
    American Express Qantas Ultimate Card

    Receive 100,000 bonus Qantas Points when you apply online by 5 April 2021, are approved and spend $3,000 on your new Card within the first 3 months. T&Cs apply. New Card Members only. Mozo Experts Choice Qantas Frequent Flyer Premium Credit Card Winner 2020^. T&C’s apply

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Qantas Frequent Flyer
    $450
    100,000
    1.25 points uncapped
    Compare
    Details
  • NAB Qantas Rewards Signature Card

    NABs fastest way to earn Qantas Points. 130,000 bonus Qantas Points when you spend $3,000 on everyday purchases within 60 days of account opening and keep the card open for 12 months. 7 complimentary insurances when you meet eligibility criteria including Overseas Travel Insurance.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Qantas Frequent Flyer
    $395 $295 in the first year
    130,000
    1 point up to $5,000/month, then
    0.5 points up to $20,000/month
    Compare
    Details
  • BankSA Amplify Signature

    Earn up to 200,000 Bonus Amplify Rewards Points over 2 years (130k yr 1, 70k yr 2) when you spend $12k on eligible purchases each year. $139 reduced first year annual card fee (normally $279). New cards only, Eligibility criteria and T&Cs apply. Offer ends 2nd March 2021.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Amplify Rewards
    $279 $139 in the first year
    200,000
    1.5 points uncapped
    Compare
    Details

How much is the annual fee for rewards credit cards?

Part and parcel of credit cards are fees and charges, some are avoidable while others you just can’t dodge. The annual fee for rewards credit cards is one of those ones you can’t evade! This account-keeping fee is high, and can range from $0 to $450 for platinum rewards credit cards. For example, the ANZ Frequent Flyer Black credit card has an annual fee of $425!

Most rewards cards have higher annual fees than other credit cards. For example, a low interest credit card has an average annual fee of $60. However you can avoid this charge altogether with a no fee credit card while some providers will waive the fee! Have a read of our guide on avoiding credit card fees.

4 step guide to the right rewards decision

To help you decide if you will receive maximum value from a rewards credit card follow these easy steps.

Step 1: Take the time to calculate your annual credit card spend. This can easily be done by going through a couple of monthly statements. If you spend less than around 5,000 a year on your credit card you’re unlikely to get value from a rewards credit card as the annual fee will nullify any benefits. If you’re a big, regular spender you will get value with a rewards credit card.

Step 2: Figure out your travel habits and which airline you like to fly with. If you travel regularly be it for work or pleasure then you are likely to benefit from a frequent flyer rewards card. These rewards cards come with added benefits such a free travel insurance to the annual fee may be all worth it!

Step 3: Calculate if your annual credit card spend will net enough points to pay for the annual fee OR if your travel insurance saving is greater than the annual fee.

Step 4: Banks will charge high interest rates on reward credit cards. So when it comes to rewards cards, credit debt is a no no! If you don’t pay your bill in full and carry a balance over, all those points, frequent flyer miles will be lost to paying interest. You’re better off with a low rate card. We know that choosing a rewards card isn’t easy and you want one that will offer you rewards you’re interested in. That’s why Mozo developed the Rewards Revealer Tool. Simply plug in your annual spend and we'll show you which card will give you the best rewards for your situation.

Crunching the rewards numbers: Are you suitable for a rewards card?

Once you’ve come across a rewards card you might be interested in, calculate the minimum you would have to spend to recoup the annual fee back in rewards. Is the reward of a new toaster worth the annual fee?!

Rewards credit cards are best for…

- Big spenders

- People who use their credit card regularly

- People who will pay off their bill in full and on time each month

- Those lucky people who travel frequently

- People who have a good credit rating and earn a minimum of around $35,000 per annum.

Scenario 1

Jane is a university student who is looking at getting a credit card, so she can pay for concert tickets and clothes online as well as other day to day expenses such as food and petrol. On a tight budget, Jane plugs a few figures into the Mozo budget calculator and learns she’ll spend about $10, 000 a year on a credit card. Researching rewards credit card, Jane realises she’ll only earn around $50 worth of rewards. This definitely isn’t worth it given the annual fee can be as much as $60.

Scenario 2

John is in a long distance relationship, he lives in Sydney while his girlfriend is based in Melbourne! Flying every couple of weeks to spend time with his girlfreind, John is now all too familiar with Sydney and Melbourne airport but he knows he isn’t reaping in the benefits from all the flying. John uses the Mozo rewards revealer to find a worthwhile and beneficial rewards credit card.

John’s preferred airline is Qantas and with an ANZ Frequent Flyer Platinum credit card he can earn points direct to the Qantas Frequent Flyer program. There’s no annual fee for the first year which is a bonus but then it’s $295 per annum after that. However doing the maths, John knows that with all the frequent flying he’ll be doing as well as paying for all bills and shopping with a credit card the reward points he’ll earn will outweigh the annual fee.

^See information about the Mozo Experts Choice Rewards Credit Cards Awards

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