Are you cashing in on your credit card rewards?

Credit cards have become an essential part of our financial lives, offering convenience, security, and a range of other benefits and perks. But whether you have one or five rewards cards, it’s crucial that you assess if you are truly cashing in on your credit card rewards.

One of the biggest advantages of using credit cards is the opportunity to earn rewards. Between cashback deals, travel perks and discounts, VIP concierge services and more, rewards programs have gained immense popularity among Australian cardholders. 

However, many cardholders overlook the full potential of their rewards by not familiarising themselves with their card rewards program. Let’s explore the different types of rewards credit cards and who they may suit, as well as tips and tricks to earn more rewards points. 

Different credit card reward types

Not all credit card rewards are the same, and different reward types may better suit some Australians than others.

How can you earn rewards points on credit cards?

There are three main ways to earn credit card points, regardless of the rewards or frequent flyer program:

1. Sign-up bonus points - Can range from a few thousand to hundreds of thousands of points when you sign up for a new credit card (upon approval - assuming you meet all eligibility requirements.
2. Earn rates - The earn rate is the amount of dollars spent per point earned, such as 1 dollar per point. This can be as low as 50c per point or as high as $2-3 per point, depending on the card issuer. You may only be able to earn points on eligible spending, such as purchasing clothing with your credit card through an affiliated retailer.
3. Transferral - If you’re looking for a new credit card, some issuers may allow you to transfer your existing points balance to a new card with a similar rewards program, suchas Qantas frequent flyers. This way you don’t lose any points you’ve acquired. 

By understanding the different reward card types, you may better understand which one actually suits your spending habits. For example, if you’re the type of person to only use your credit card for big-ticket one-off purchases, chasing rewards points may not be appropriate. 

Instead, you may find that the cost associated with these cards, such as annual fees and interest rates, are more trouble than they’re worth. In this case, you may want to consider a cash back rewards card instead. Or even a low-rate, low-fee option. 

What can you redeem credit card rewards for?

Now that you understand a little more about the types of rewards cards available, it’s time to familiarise yourself with the actual rewards you could earn. After all, if a credit card is offering perks and benefits that do not suit your financial goals or lifestyle, it may not be the right card for you.

For more information on how you can redeem your rewards points, read our helpful guide.

How to earn more rewards points: strategies to boost your earnings

Sign up bonuses

There’s a reason why some Australians change up their credit cards once or twice a year. These points chasers know that accumulating rewards points can take years, and may require you to spend thousands of dollars to do so. This is where sign-up bonuses come in.

Many rewards credit cards will come with competitive sign-up deals, with some in the six-figure range. By keeping abreast of these generous sign-up offers, you can apply for a new credit card, earn the points bonus and then close the card once you’ve transferred or spent the points. This can be especially useful if you are planning an overseas trip, as some frequent flyer points bonuses on sign up can take you as far as Europe and back. 

Just be wary of applying for multiple credit cards at once, as this can hurt your credit score. Also, you will need to meet the eligibility criteria of the credit card to gain approval, and there may be strict requirements to follow before the issuer will pay you the points bonus, such as a spending expectation in the first three months.  

Supplementary credit cards

A simple way to earn more rewards points is to have other members of your household make purchases through the credit card account. It may be worth ordering a supplementary credit card for your partner, for example, as you’ll earn even more points if you get other people to make their purchases through your rewards programs.

Keep in mind that some card issuers can charge you a fee for additional cards. Also, you will need to budget ahead of time to ensure you can pay off the balance in full each statement period with an additional spender, or you could be charged interest and accrue debt. 

Mixing money and relationships can be tricky, as poor financial behaviour from another person could severely impact your credit score, and ultimately your relationship. Be sure to talk this one through before you proceed.  

Pay the bill (but get paid back)

Another option is to make larger purchases on a more regular basis, particularly if you are paying for a group activity. For example, if you and a friend go to a restaurant, you can double your points if you pay the bill and your friend reimburses you. Or, if you and your partner go on holiday, you can double your points if you handle the bookings and your partner pays you back.

Crunch the numbers

Different brands affiliated with your credit card issuer can offer different rewards earn rates. However, these rates can be deceiving, so it’s crucial that you do the maths if you have several options to choose from.

For example, Supermarket 1 might give you 400 points for every $100 you spend, and $1 cashback for 1,000 points you accrue. So, you would have to spend $250 to get $1 back. 

Supermarket 2 might give you 300 points for every $100 you spend and give you $1 back for every 600 points. So, you would have to spend $200 to get $1 back.

While Supermarket 1 may appear to offer you a larger earn rate, in this example Supermarket 2 would have the superior rewards program, once you crunch the numbers.

Look for complimentary offers

Some credit card companies may offer the ability to earn more points over a short period. For example, your airline might give you bonus points if you travel during a low season. Or your supermarket might give you bonus points if you buy specific products that are being featured that month.

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