Frequent Flyer Credit Cards Compared

If you have been thinking about getting a rewards credit card then you're in the right place. But before signing up, there is some vital frequent flyer information you'll need to know (and understand) before you start planning your next getaway.

Are frequent flyer credit cards worth it?

Pretty much every bank in Australia will have a rewards credit card that will be linked to a rewards program that you can redeem for frequent flyer points or travel rewards. Finding a card that is right for you comes down to whether you fly frequently and want to earn points directly with a particular airline or redeem  points for travel rewards with any airline when you want a trip or a holiday. If the latter is you, then head over to our main rewards credit card page which has more info on the cards that offer general travel rewards programs.

Frequent Flyer Credit Cards are credit cards that are directly linked with an airline's frequent flyer program. This means that every time you spend money on your credit card, the points you earn get automatically credited to your frequent flyer airline account. Here in Australia airline frequent flyer programs that have direct linked credit cards include Qantas Frequent Flyer, Virgin Velocity, Emirates Skywards Frequent Flyer and KrisFlyer from Singapore Airlines.

Will a frequent flyer credit card be suitable for me?

As with all rewards credit cards if you pay your balance off in full each month then a frequent flyer credit card could be a good way for you to get rewarded for your spending. If you occasionally or always carry a balance on your credit card, frequent flyer cards will deliver you less value as it is likely you will pay more in interest and fees than you will earn in rewards, however you can also consider other options if you want to check out the best credit cards page. 

If you choose a program where points don't expire then a frequent flyer credit card could be good for small and big spenders alike. But you need to be aware that in order to get a free domestic return flight you'll need to accrue at least on 13,000 points (Velocity) and 16,000 points (Qantas). At 1 point per $1 spent that means you'll need to spend at least $13,000 a year on your card to redeem a basic flight reward.

What are the points earning rates for frequent flyer credit cards?

Points earning rates for each credit card depends on a number of factors so it is important now to take some time to review what's on offer so that you can be sure that once you've got your credit card you can take advantage of the card's frequent flyer perks to the max.

Don't assume that you will get a 1 frequent flyer point for every dollar you spend. With frequent flyer credit cards you will find there are differences in earning rates between:

• American Express versus Visa and MasterCard. The points earning rates for American Express branded credit cards are usually higher than Visa or MasterCards. 

• Domestic versus international purchases. Some frequent flyer credit cards will have higher points earning rates for purchases made overseas. For instance, with the Emirates Citibank World MasterCard you earn 1 Skywards Mile per $1 for purchases made in Australia, but 1.5 Skywards Miles for every $1 spent overseas.

• Airline verses everyday spending. You’ll usually earn more points when you purchase airline related products such as flights on your frequent flyer credit card, than if you were using your card to purchase your groceries.

• Bonus partners. Every card will have bonus partners so it’s a good idea to become familiar with bonus partners because you’ll earn points faster than the normal points earning rate when you buy products or services with them.

• Credit card providers. With one bank you might earn 1 point per $1 spent on Visa and with another card provider the earning rate will be 0.5 points per $1 dollar. Higher points earning rates can be important to redeeming rewards fast but only if you’re not paying more for them so be sure you take into account the credit card’s interest rate and annual fees as well as points earning rates when comparing card providers.

Are all frequent flyer program points equal in value?

No, just as you will find a difference in the points earned depending on what card you use or what you buy, you'll also find that redemption rates are different across frequent flyer programs for the same flight or service.

For instance, Qantas and Virgin have a different points redemption for domestic flights, see example here:

• Qantas Frequent Flyer. Points required for Melbourne - Sydney Flight: 8000 points (taxes and govt charges excluded)

• Velocity Frequent Flyer. Points required for Melbourne - Sydney Flight: 7800 points (taxes and govt charges excluded)

You'll want to choose a card that is going to deliver you great value for your annual spend on your credit card. This is why Mozo developed our rewards revealer tool. Simply plug in your annual spend and we'll show you which card will give you good value for domestic or international flight rewards.

What are the dos and don’ts for redeeming frequent flyer miles?

Once you've accumulated a stack of frequent flyer points with your shiny new credit card you'll want to make sure you get top value for your points no matter which program you belong to. As we've stated above, there is no set value for points so when it comes time to cashing in your points you'll need to be savvy. Here are some of the top dos and don'ts.

• DO shop around for the cheapest flight. Don’t waste 16,000 points on a flight that you can get on sale for $100. Use your points for travel during peak times and high season when you’ll get more value for your money compared with paying full price for the ticket.

• DON’T trade points for goods at rewards stores. Yes, you can use your points at the Qantas online mall but generally you’ll get better value for using your points for flights not shopping rewards.

• DO use points to upgrade as this is one of the best ways to get value from your frequent flyer points. You’ll just need to ensure when you purchase your flight you get an ‘upgradable’ fare.

• DON’T let points expire. If you are not going to use your points, donate them to charity or transfer to an eligible family member.

• DON’T forget your frequent flyer membership card. Whip it out at every occasion so that you can earn points for staying at your favourite hotel to renting a car.

Do Frequent Flyer Credit Cards have fees?

Yes, if you are not yet a member of the frequent flyer program attached to the credit card you will need to join. Sometimes the fee to join will be waived when you sign up for your card or included as part of an introductory offer.

In addition to the frequent flyer club membership fee, your credit card will have standard credit card fees that you'll need to be aware of including: 

• Annual fee. Generally, credit cards linked to frequent flyer programs have higher annual fees that standard rewards cards.

• Program fee. Some Qantas direct earn airline rewards credit cards will have an annual program fee that you will pay in addition to the card’s annual fee.

• Foreign transaction fee. When you make a purchase internationally either online or in person you’ll generally pay a foreign transaction fee on credit card purchases. This is a percentage (between 2 -3%) of the Australian dollar amount.

• Late payment fee. If you skip or are late paying your credit card you could be hit with a late payment fee. This is easily avoided by setting up a direct debit or automatic transfer on the payment due date.

• Cash advance fee. While you can withdraw cash using your credit card it is not advisable. A cash advance fee will usually be a set fee or a percentage of the withdrawal amount, whichever is higher of the two.

Can I earn frequent flyer points on a balance transfer?

No, if there is a balance transfer offer included with the credit card you will not earn points on any balances transferred.

Also, keep in mind that with many credit cards there are no interest free days on new purchases while you have an outstanding balance transfer.

Are there other features to look for in a frequent flyer credit card?

You want to get value for the annual fee you pay, so in addition to a good points earning rate, you'll want to look for:

• Interest free days. Check out the number of interest free days you’ll get when you pay off your balance in full each month. Standard number of days is 44 though some cards go up to 62 days.

• Free overseas travel insurance. Many credit cards now come with complimentary travel insurance which can save you lots of cash if you travel frequently. You’ll need to use your credit card to purchase your flight or some of your prepaid travel expenses so be sure to check your eligibility before you take off.

• Bonus miles. If your card includes a bonus offer, be sure you read the criteria as many cards require you to spend a set amount or use the card within a set period to get the bonus points.

• Purchase protection and extended warranty insurance. Check out the card’s standard insurances as you could be covered if you lose or break an item within the coverage period.