If you’re using a credit card to pay for your Christmas shopping it makes sense to find a card with the most generous rewards. By Jackie Pearson.
December 1, 2009
Jetstar is the latest company to go into competition with the big banks by launching its own credit card in conjunction with Macquarie Bank. Woolworths, Myer, David Jones... the list of major companies offering companion credit cards goes on and on.
With so much competition between credit card rewards programs how do you decide which card represents the best value for money?
How do you use your card?
If you have a carry-over balance on your credit card from month to month and pay interest on your purchases, your first priority should be to find the card with the lowest interest rate and fees so you can pay back your debt as quickly as possible. Rewards programs should be a secondary consideration.
If, on the other hand, you prefer to do all your shopping on a credit card and pay back the entire balance within the interest-free period, then it’s worth finding a card with the most generous rewards for your spending habits.
What type of reward?
The first step in choosing the best reward card is to think about the types of rewards you’re interested in. Perhaps you want frequent flyer points or you are considering other options that might be more appealing. Some cards allow you to redeem points on anything and everything from electrical appliances and shopping vouchers through to holidays.
Another option is “cash backs” where you receive credits to your card based on a percentage of the amount you spend. And then there are instant rewards offered by participating retailers or service providers, which can include two-for-one offers and discounts.
Points per dollar
The next step is to crunch the numbers. First you need to figure out how many points you receive for each dollar you spend. Then you need to understand what the points are actually worth. Use our Star Ratings powered by CANSTAR CANNEX and comparison tables to find the card that represents the best value for money.
And there are plenty of bonuses and extra incentives to sign up to new cards in the lead up to Christmas. For example, the Citibank Gold Visa card is offering 5000 bonus rewards points for first use when you sign up for a new card.
Don’t forget the fees!
Choose a card with points that will at least cover the cost of your annual fee. And match your card to your annual spending level. If you only use your card a few times each month, you don’t need a platinum credit card.