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How to maximise your rewards points

How to maximise your rewards points

The key to getting the most value from rewards programs is to shop smartly rather than extravagantly.

Supermarkets, airlines and credit card providers use reward points as a way to promote consumer loyalty and encourage extra spending.

These brands like to make consumers think they’re winning by giving them hundreds of points for relatively small transactions. That can tempt people to make unnecessary purchases. But while all those points might seem valuable, they might translate into just a few dollars of rewards.

So the number one rule with rewards programs is to recognise that brands don’t give something for nothing. That means avoiding two traps – buying things you don’t need and paying high annual fees to access a rewards program.

Here are five other secrets to getting the most out of reward programs.

1. Use them more

Many people fail to rack up as many points as they could because they sometimes avoid using their rewards programs – either out of forgetfulness or embarrassment. The way around this problem is not to spend more money, but to use a rewards program every chance you get.

For example, if you have a credit card rewards program, you can maximise your rewards by switching from cash to plastic. That means pulling out your card not just for expensive items like holidays, televisions and insurance but also everyday purchases like meals, coffees and petrol.

Traps to avoid: First, never use the card if the business charges a transaction fee, because that will always exceed the rewards on offer. Second, always pay off your credit card each month, because extra interest payments will also exceed any rewards.

2. Double up

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Following on from the point above, you’ll earn even more points if you get other people to make their purchases through your rewards programs.

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 with cash. Or if you and your partner go on holiday, you can double your points if you handle the bookings and your partner makes an online banking transfer to pay you back.

Traps to avoid: You’ll lose a lot of money if they don’t pay you back!

3. Do your sums

Different brands offer different exchange rates, so make sure you do your maths if you have several options to choose from.

For example, Supermarket 1 might give you 400 points for every $100 you spend and might give you $1 cashback for 1000 points you accrue. So you would have to spend $250 to get $1 back.

Supermarket 2 two 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.

In this hypothetical example, Supermarket 2 would have the superior rewards program – despite giving fewer points per dollar spent.

Traps to avoid: When comparing supermarkets, the rewards program should be a minor consideration. Location, prices, quality, service and product range are far more important. Similarly, when comparing credit cards, interest rates, annual fees and repayment terms are far more important. Rewards should play only a small part in your choice of brand.

4. Spend strategically

Your airline might give you bonus points if you travel during a specific period. Or your supermarket might give you bonus points if you buy specific products.

To access those extra points, you might have to change your annual leave or switch from one brand of ice cream to another.

Traps to avoid: Only alter your purchase plans if it won’t cause any inconvenience. It’s not worth taking leave at an inconvenient time or buying products you don’t want just for the points. In other words, don’t give up too much for too few points.

5. Cast your net more widely

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Rewards programs sometimes allow you to earn points at unrelated businesses.

For example, if you’ve signed up for Flybuys through Coles, you can also pick up points at Target, AGL, Medibank, OPSM and NAB.

Or you could earn Qantas points by spending money with Woolworths, American Express, Airbnb, Westpac and Vodafone.

Traps to avoid: Don’t use partner businesses if you can get better value elsewhere, because the extra rewards points won’t be worth it.

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Learn more about credit cards

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How to get a free credit card

There's no such thing as a free lunch. All credit cards come with associated costs when used to make purchases, even if it’s simply the cost of making repayments.

However, many lenders offer incentives for customers such as a $0 annual fee or 0 per cent interest on purchases during an introductory period. Additionally, paying off your balance in full during an interest-free period means you could only have to pay back the cost of purchases without interest. You could also be eligible for additional rewards such as cashback during that time, saving you more money.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.