November 16, 2010
There's an abundance of different types of credit card rewards programs on the market, but the way you use your credit card can make a big difference to the benefits you receive. So if you like the sound of being able to fly free, there is one card that stands out from the pack.
Better value and more rewards
A recent study by RateCity compared the new Virgin Money Virgin Flyer Card with rewards credit cards from the major four banks, ANZ, Commonwealth Bank, NAB and Westpac. RateCity found that out of the 11 cards offering flight rewards programs, the Virgin Flyer Visa card had the best value, based on Sydney to Melbourne return flights.
While the Virgin Money card had the highest annual fee of $99, you can receive up to four free one-way flights each year by purchasing a seat on Virgin Blue and getting the second one free.
RateCity calculated that based on an average spend of $15,000 per year, the Virgin Flyer card offered about $400 worth of value after the annual card fee is deducted (price of free flights plus the value of your points redeemed).
The card that offered the least amount of value based on the annual spend of $15,000, was the Commonwealth Bank Awards MasterCard. In fact, Commonwealth Bank's Awards MasterCard would cost customers $20 to use the card in the same scenario as the Virgin Flyer Card with purchasing two return flights between Sydney and Melbourne.
"We've done a detailed 'apples for apples' comparison of the rewards available across several popular credit cards," RateCity CEO Damian Smith says, "and we're impressed with what Virgin Money is offering customers. Sensible use of the Virgin Flyer card will get customers more flight rewards than other comparable cards, and for many customers, that's a great benefit."
If you have family interstate or you fly interstate regularly, you would reap the rewards of this card. Just remember that the benefits only kick in when the card is used to purchase Virgin Blue flights, so if you're an infrequent flyer then this card may not be the best value card for you.
Get more out of each purchase
There are a range of credit card rewards programs available to choose from, so if flying isn't for you, find one that allows you to redeem your points for vouchers or a range of other options. Keep in mind to look for one that offers more points for each dollar you spend, so you get more bang for your buck.
Also be aware that most rewards cards charge a higher interest rate compared to other types of cards, but you can keep the costs down by comparing online and looking for one with a lower interest rate and by paying it off each month.
"Like all credit card rewards programs, consumers need to make sure they pay off the balance each month and avoid paying interest to really benefit from the accumulated rewards points," Smith says.
While the Virgin Flyer is great for people that fly often, it won't suit everyone, so shop around and compare credit cards online to see what other ways you can be rewarded.