How To Choose A Credit Card Rewards Program - NerdWallet Australia (2024)

Australia has no shortage of loyalty programs and rewards credit cards, so navigating all the different options can be challenging. Need help deciding? Here’s how to choose a credit card rewards program.

Be cautious and consider your odds of approval

Rewards credit cards are available directly through banks or as co-branded products. Most come with their own unique perks and are all geared to consumers at all stages of their financial journey.

Still, it’s best not to rush in to apply for a credit card just because it has impressive rewards. As you research options, be realistic about your odds of approval. Consider your credit score, typical spending and financial goals before deciding whether or not a card has a place in your wallet.

Know why you want to earn rewards

When considering a rewards credit card, it’s good to have a plan for how you want to use the rewards. Start by thinking about how you want to use the rewards you earn.

Do you want to save on your monthly expenses by getting deals at stores where you regularly shop? Do you want to claim a big sign-up bonus and score a first-class upgrade for your next flight? Or are you more interested in slowly building up points through weekly usage?

Knowing these answers will make your choice easier because you focus on the type of rewards program most suited for your goals.

» MORE: Pros and cons of using credit cards

Choose between a bank or a co-branded rewards program

You can choose a credit card with a bank’s rewards program or a co-branded card with a loyalty program offered by a third party — usually linked to an airline, supermarket or retail giant. Westpac customers, for example, could choose credit cards associated with the bank’s own Altitude Rewards, Altitude Qantas Rewards or Altitude Velocity Rewards points.

If you know the partner brand you want to access, you can apply directly to their website. For instance, you can apply for a Coles credit card without going through your bank.

» MORE: What are store credit cards?

Decide the type of rewards you want to earn

You can earn different rewards with a credit card, and each has its own benefits. Consider how each type may benefit your lifestyle and finances.

Cashback

Cashback is a credit card rewards feature that not enough consumers know about. Using a credit card, you earn points on every transaction, which accrue over time. Those points can be converted into cashback, essentially putting money back into your account.

There are generally three types of cashback:

• a percentage of the total purchases — usually up to 2% — converted into dollars
• a cash voucher when you reach a spending limit
• a sign-up bonus incentive for new cardholders.

Points

Points are usually tied to a loyalty or bank rewards program; most banks have an in-house rewards program. Each of the Big Four banks have their loyalty programs:

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

Generally, you’ll earn rewards points through card transactions, as sign-up introductory offers, and when shopping with partners. For example, with the CommBank Awards credit card, you can earn 1 point for every dollar you spend (up to $2,000 in a statement period).

Just like how you can earn reward points in various ways, you can redeem them in multiple ways. Options vary by program but typically include travel, merchandise, gift cards and more.

Frequent flyer rewards

Frequent flyer programs and travel rewards schemes are designed with travellers in mind and offer points or miles. Banks have affiliations with specific airlines, and the two main frequent flyer programs they offer are Qantas and Virgin (Velocity).

You earn frequent flyer rewards like other types of points—through regular spending or as part of a sign-up bonus. Consistently accruing points over the months and years can lead to a healthy total that many travellers use to pay for their big trips.

» MORE: 8 tips for using a credit card overseas

Make sure redemption is easy

Even if a rewards program promises incredible value, having hundreds of thousands of points won’t mean much if you can’t easily use them. Make sure you aren’t signing up for a convoluted rewards scheme by considering whether the rewards suit your needs.

Ability to transfer points

You can’t generally transfer your bank rewards points from one bank to another. For example, if you’re with Westpac, you can’t transfer your accrued points to CommBank.

However, some rewards schemes, such as frequent flyer programs or American Express Membership Rewards, allow you to transfer points to and from programs. For example, if you’re a Qantas member, you can transfer 1,500 points or more to an eligible family member within a 12-month period.

Expiry date

Each credit card provider runs their own rewards program, so it’s best to check with them to see if your points expire. If you’ve switched banks and are a frequent flyer member, ensure your new card links to your number.

For Qantas, as long as you earn or use points on eligible activities at least once every 18 months, accrued rewards won’t expire. To avoid losing points, develop and maintain a strategy to build up and redeem your rewards.

» MORE: Types of credit cards in Australia

Weigh up other perks and benefits

Rewards credit cards also come with other benefits.

Extra points and store rewards

Earn additional points by shopping with partner brands using your credit card. If you’re with CommBank, you can use the Bonus Points eShop to build up your rewards. For example, you can also earn six bonus points for every dollar you spend with Apple Australia.

Travel discounts, insurance and lounge passes

You can also access complimentary airport lounge passes, free travel insurance and further discounts on affiliated hotel and car hire brands with travel credit cards. If you’re a traveller, you can save hundreds or thousands yearly by being strategic with your points.

» MORE: How does credit card travel insurance work?

Explore the program partners

Explore the rewards program perks and partners, whether a bank or third party offers the credit card. There’s so much more to reward credit cards than meets the eye. Understand who the partner brands are and take note of who you already shop with. These details will help guide your decision on which card to choose.

The Qantas Premium Titanium offers a further 10% off the base fare of eligible Qantas flights for two travellers twice a year. If you travel abroad with a partner or friend and your flights are $5,000, you could save $500. This rewards card is a premium option that’s on the higher end expense-wise, but it’s a good example of the additional benefits these cards can offer.

If you’re looking for a rewards card through your bank, check the brands they’re affiliated with and list all the possibilities of accruing points.

Ask yourself if the sign-up offer really worth your while

It’s great when you can choose a credit card with a rewards program that suits your needs and comes with bonus sign-up points to give you a head start with your points. Depending on the bank and credit card product, you can join usually with somewhere between 50,000 and 150,000 points. Then, you can enjoy the monetary benefits of a rewards credit card once approved.

However, sign-up bonuses often come with minimum spending requirements, which may exceed your budget. So, ensure you aren’t spending more than you need to meet the promotional offer. Only spend what you can repay, avoid interest, and regularly review your statement, finances and points strategy. Calculate the savings every month and see how you can access more discounts as your provider introduces new partners and offerings. Keep the dialogue open with your bank — they’re there to help you.