We’ve crunched the numbers on the highest-earning frequent flyer cards

As banks quietly shake up the credit card landscape by hiking interest rates and shaving earn rates on some rewards schemes, RateCity.com.au has crunched the numbers on the highest-earning frequent flyer cards.

Yesterday, Westpac increased interest rates on most of its credit cards by 0.25 per cent, following a similar move by its subsidiaries St. George Bank, Bank of Melbourne and Bank SA last month which hiked some rates by 0.25 per cent.

Bankwest is also reducing the number of Qantas Frequent Flyer points that can be earned on its Qantas Mastercards from 22 May 2019. The move follows on from American Express’s announcement last year that it would overhaul its rewards offering in April 2019. 

Meanwhile, some card providers are offering huge sign-up bonuses and attractive points-per-dollars spent in a bid to inject life into a slowing credit card market.

New research from RateCity.com.au has revealed some of the highest earning frequent flyer cards for people spending $20,000 per year over three years.

Qantas Money’s Qantas Premier Platinum card topped the RateCity.com.au list, with an earn rate of 1 point per dollar on all purchases up to $10,000 per month and a sign-up bonus of 100,000 points in the first two years. This card offered the highest gain of $1,913 after three years. The research factors are based on someone redeeming the points for Sydney-Melbourne flights and factors in the cost of the annual fee, however it assumes the person is not paying interest on the card.

Sally Tindall, research director at RateCity.com.au said the changes are a timely reminder for people to check they’re on the right card.

“There are a lot of cards offering huge sign-up bonus points but many of them come with a catch. Every card in our top five list had a relatively high interest rate and a hefty annual fee.

“Credit card numbers are on the decline so it’s no wonder lenders are throwing in serious sweeteners to get new customers in the door,” she said.

“If you are looking to reassess your credit card, try and pick one that compliments your spending habits. The last thing you want is a credit card that sends you financially backwards.”

Things to look out for with frequent flyer cards:

• Rewards – don’t sign up to a frequent flyer credit card if you’re someone who doesn’t fly often. If you’re not using the points, then you’re likely to be shelling out money for nothing.
• Fees – many of the frequent flyer cards discount the annual fee in the first year. But be aware, all of the cards in our top list had ongoing annual fees of at least $129;
• Interest rate – most frequent flyer cards have high interest rates attached, so if you are someone who has even a dollar of debt on your card, then you could be better off ditching rewards in favour of a low rate card.

Some of the highest earning frequent flyer cards – based on an annual spend of $20K after 3 years

Source: RateCity.com.au. Correct as at 1 May, 2019 and subject to change.

Notes: 

This scenario is modelled on a cardholder with an annual spend of $20K per year, or $1667 per month. We looked at cards that were directly linked to Qantas and Virgin frequent flyer programs in the RateCity database.

The total gain / loss is the dollar value of the points earned in 3 years, minus the cost of the annual fee. It does not include any interest charges or late payment fees.

For cards that tier your points depending on where you spend, we have assumed the points earned were at the standard rate, with the exception of cards that allocate higher points for everyday purchases of food and petrol which we have factored in as 1/3 of the monthly card spend.

Sign up bonus points were not allocated where the cardholder would not meet the spend conditions, based on a monthly spend of $1667.

The value of the points were calculated for both Qantas and Virgin, based on a Sydney – Melbourne flight, 6 months out, on a Saturday at 8am, returning on the following Saturday at 4pm.

Specials whereby the card issuer waives or reduces the annual fee in the first year were taken into account.

Sign up offers of cashbacks were included in the calculations and deducted from the annual fee costs. Annual travel vouchers which have more onerous terms and conditions than points were not included but noted at the end.

Cards have a range of additional perks such as insurances, fraud protection, conceirge services, airport lounge passes which have not been taken into account.

For St George / Bank Melbourne / Bank SA Amplify Signature the final total does not take into account birthday points which varies according to a person’s birthday.

Where there are bundle cards (in the case of Westpac) we have assumed they applied for both cards at the same time and the spending is split evenly between the 2 cards.

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