Reward programs - the ultimate guide

As a credit card holder, you may think all the benefits lie with the money hungry banks and financial institutions. Wrong! As the owner of a rewards credit card you get to lap up some cool perks of your own. Each time you spend money on your credit card, you earn points from your bank, then YOU get to dictate how you want to be rewarded for your spending. Not a bad deal! However the reward program you choose will dictate how many points you accrue for your spending. But before you start planning on using those points for a trip to Bali or a new high definition flat screen TV, make sure your read this guide on the ins and outs of a reward program. 

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There are so many different rewards programs on offer, you’re bound to find one that suits your interests, lifestyle and spending habits. Here’s a breakdown of rewards programs you can choose from: 

• Frequent flyer and travel rewards: These are the most popular reward programs on offer. Many banks have credit cards that are directly linked to an airline's frequent flyer program, for example Qantas Frequent Flyer program or Virgin Velocity Frequent Flyer program. So each time you use your frequent flyer credit card you will accumulate Qantas or Velocity points. These points can be redeemed for flights, domestic and international as well as other travel rewards such as flight upgrades, airline lounge, hotels and car hire.     
• Cashback reward: This reward card program is definitely appealing… receive cold, hard cash for making purchases on your credit card! Instead of your points being converted to rewards you’ll be refunded a certain percentage of your spending. For example, if you have an annual spend of $17,000 on your Westpac Altitude Rewards Card, you’ll receive $104 cashback. 
• General rewards: If you’re looking for flexibility in a reward program then a general rewards card is a good option. You can use redeem your points on range of products and services from cash back, shopping and travel rewards including flights or accommodation. 
• Retail rewards: If you deem yourself a shopaholic then a retail rewards card could be the right fit for you. When you shop at department stores such as Myer or David Jones you can receive bonus points. 
• Supermarket rewards: The two largest supermarket chains in Australia, Coles and Woolworths have a reward program for every time you use your credit card to stock up on food. When you shop at Coles you can swipe your Flybuys card to earn points when at Woolworths you can accrue points with an Everyday Rewards card. 
• Direct earn cards: These credit cards are directly linked to a reward program, making it easier to earn and redeem points. For example, the ANZ Frequent Flyer credit card is directly linked to the Qantas rewards program, so each time you use your card points automatically accrue to your Qantas Frequent Flyer membership.  

Ready to start comparing rewards credit cards? Check out some of the top deals on the market right now in the comparison table below, then scroll down for our tips on how to get the most out of your rewards program.

Reward programs may sound a little too good to be true – getting something for nothing!  While it’s clear (just by the name) reward card programs have their advantages, especially when used responsibly. However there are also some disadvantages you need to be aware of. 

Pros 

• Earn points and receive free items for everyday spending just when you use your rewards credit card 
• Reward programs are suitable for big spenders who are likely to rack up points quickly 
• There’s a huge range of rewards to choose from to suits everyone’s interest and lifestyle 
• Many reward cards come with bonus features such as complimentary travel insurance, price protection and concierge service 

Cons 

• Reward card programs come with a hefty annual fee, as much as $425, so you may not get that much value in the points you earn 
• Interest rates for reward cards are a lot higher compared to a general card like a low rate card 
• Reward points can expire…make sure you read the fine print 
• If you don’t pay off your balance in full and on time each month it will cost you! Read our guide on avoiding credit card fees. 

#1. Use your reward credit card whenever you make a purchase 

#2. Shop with affiliated partners and fly with linked airlines 

#3. When on offer, take advantage of bonus points 

#4. Pay for bills using your reward card 

#5. Don’t forget to keep you reward program card in your wallet so you can swipe it whenever the opportunity arises 

#6. Sign up to email newsletter so you can be alerted to special offers to earn bonus points 

The main factor to consider first when deciding on a rewards card program, is if you will pay your bill off on time and in full each month. If the answer is ‘no’ then you should think twice about getting your hands on this type of fancy plastic, as the interest you will pay for an ongoing balance on top of a high annual fee will outweigh the value you will receive in awards. However if you’re one to pay in full the outstanding balance on your statement, keep in mind these features when choosing a reward program. Don’t forget it’s also important to find one that you will use and will suit your spending habits: 

Points expiry: Look at the fine print and find out when the points expire. Try and find a reward program where the points don’t expire. You’d hate to plan a family trip to Bali using your Qantas Frequent Flyer points only to find out they’ll expire by the time you want to redeem them. 

Points capping: Some cards will have a cap on the amount of points you can earn in a month or even a year. Make sure the limit isn’t so low you don’t get any value from the rewards on offer. 

Points redemption: Some cards require you to manually transfer points to a program for redemption while others will make life easy for you by automatically transferring the points to the reward program. You may have to wait for rewards or vouchers to be sent to you. With frequent flyer points it can be difficult to redeem your points for a flight as often there is only a set number of seats allocated to frequent flyers. 

Your interests: If you have a fear of flying, there is no point in choosing a frequent flyer rewards card. Perhaps you’re better suited to a general rewards card. Have a think about your lifestyle, hobbies and interests. That's going to help you to decide on a reward program that is the best value for you.

Value of the points: Generally speaking, most cards have a standard equation of $1 equals 1 point. However some cards may have a higher or lower value as the brand can have an impact. For example, $1 spent on AMEX may earn you 3 points but only one on Visa. 

It's important to consider all of the above features in a rewards program, as well as which provider you are going to sign up with.  

Whether you choose from one of the big banks: 

• CommBank Awards Program 
• NAB Rewards Program
• Westpac Altitude Program
• ANZ Rewards Program 

Or from a smaller provider, like one of the following: 

• HSBC Rewards Plus Program
• American Express Membership Rewards Program 
• St George Amplify Rewards Program 
• Bank of Melbourne Amplify Rewards Program
• BankSA Amplify Rewards Program
• Bankwest More Program
• Citi Rewards Program

Make sure you weigh up which provider ticks the right boxes for you, whether that's in features, points earnings or upfront and ongoing fees. 

There are some handy and useful features that come with your rewards credit card including: Complimentary travel insurance, purchase and price protection, concierge, payWave and PayPass. For a more comprehensive and detailed explanation head to our credit card features guide. 

We know that choosing a rewards card isn’t easy given there’s so many options on the table. That’s why Mozo developed the Rewards Revealer Tool. Plug in your annual spend to find a ranking of rewards cards based on your spending level and rewards you're interested in. 

All these wonderful rewards and features do come at a cost, in the form of interest and fees. 

• Interest rates: Banks and financial institutions do charge high interest rates for rewards cards usually between 19-22%. So make sure you pay the full amount owing on your statement to avoid being charged interest. Low interest cards typically have an interest rate of 14% per annum or less. 
• Annual fee: There’s no avoiding this costly account-keeping fee, it can range from $100-$450. The annual fee of a rewards cards is a substantial amount higher than a cards which doesn’t offer rewards. 
• Late payment fee: If you fail to pay your credit card bill by the due date, expect a late payment fee of as much as $30. This fee can be easily avoided by setting up a direct debt or automatic transfer. 
• Cash advance fee: Using your credit card to withdraw money from an ATM is a big NO NO! You’ll be charged a withdrawal fee of around 3% on the amount you take out plus your provider will start charging you interest on that money which can be as high as 20%. 
• Currency conversion fee: When you use your credit card overseas or when you shop at an international online store your provider will charge you a currency conversion fee of around 3% of the Australian dollar amount. Head over to our travel money section of the site so you don’t return home from your next overseas trip with a massive credit card bill. 
• Frequent Flyer membership fee: Some frequent flyer reward programs have a fee to join but check with your provider as they may waive this. 

Save yourself money by reading our guide on avoiding credit card fees. 

• DON’T forget to redeem your reward points before they expire 
• DO pay your credit card bill in full by the due date 
• DON’T spend more on your credit card than what you can afford to repay 
• DO find a reward program that you will benefit from 
• DON’T choose a card where the cost outweighs the rewards 
• DO leave your rewards card in your wallet 
• DO use your rewards credit card whenever you make a purchase 
• DON’T get carried away and overspend just because you think you’ll earn more points