How do we compare our credit cards
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Which banks are offering relief on credit card repayments for COVID-19?
With thousands of Australians losing their jobs due to the catastrophic COVID-19 outbreak, you may be worrying about how you’ll be able to meet your credit card repayments.
Rewards and frequent flyer
The quick summary:
- We worked out how many points you will if you spend $5k each month
- Then worked out how much this is worth, in or flights
- Finally, subtract the annual fee, because no one likes these!
We start with the Points Per $1 Spent
This shows the amount of rewards points you will earn per dollar you spend. For some card providers, you’ll get issued an American Express as well as a Visa or MasterCard, with more points earned for Amex spending. Some cards are also subject to points caps which limit the total points you can earn in a month or year, tiers which mean you earn less points after a certain amount of spending.
You may notice for some frequent flyer cards there is a different number of points earned per dollar spent, compared to when you view the rewards information. This is because for these cards, you earn rewards points with you card provider, then swap these for frequent flyer points with one of the airline programs – but it’s not always a one for one swap. For these cards, we’ve done the calculation to work out how many points you would effectively earn when you swap your card provider’s reward points to frequent flyer points, based on the first partner listed.
How we’ve measured the Value of Rewards
First we take the amount spent on the card each month, this is based on $5,000, and work out the total number of points you would earn in a year. It’s an estimate, and doesn’t include any bonuses or special offers. We take into account points caps and other rules listed above. For cards that offer an American express card as well as a Visa or MasterCard, we’ve used the higher earn rate that comes with the Amex card.
From here we work out what those points are worth, once you swap them for the rewards offered by your provider. We’ve based this calculation on converting your points to shopping vouchers from the provider. There’s a range of other things you can swap for, but for consistency and simplicity, we’ve used this for our calculations. Swapping your points for different types of rewards will provide a different amount of value.
Finally we subtract the annual fees. Rewards cards often come with a much higher annual fee, so it’s important to factor this in. Some providers charge an additional rewards program fee, so we’ve added this in too.
This is much the same as the value of rewards, except we’ve worked out how many times you could fly from Sydney to Melbourne and back, rather than the dollar value of your points. We’ve done this because there’s officially no dollar value to the normal frequent flyer points you earn – you can swap them for seats on the plane, if these seats are available. We’ve listed the annual fees, but we haven’t subtracted them.
Other things to note
For some cards, if you want to earn Qantas Frequent Flyer points, you have to ‘opt in’ to the program from the start. So keep in mind some of the other rewards benefits and partners we listed may not be available to you as you’ll be earning points directly into your Qantas account, rather than the card provider’s rewards program.
All numbers are the best information we know on the day. We aim to keep things very accurate, but please check once you get to the card provider’s website.
All calculations are our best estimates based on the numbers we know.
The comparison does not include all features or benefits that are relevant to you, again, check for more details on the card provider’s website.
What we mean when we say ‘Good For’
We use the term ‘Good For’ to highlight some of the key features of each card. This is not a rating, recommendation, or personal advice, for more information please read our important disclosures and general advice warning. We aim to compare all cards on a level playing field by looking at the following features when categorising them:
We look at the ongoing annual interest rate for purchases, ignoring any introductory offers. We’ve defined ‘low rate’ as anything under 14%.
We look at the ongoing annual fee, ignoring any introductory offers or fee waivers. We’ve defined ‘low fee’ as anything under $50, which is about half of the average annual fee.
Rewards cards are credit cards that earn points for spending on the card. There are a wide range of rewards available, but for the purposes of our comparison we have focussed on shopping voucher rewards. To qualify as ‘good for’ Rewards, a card must earn points on regular spending and allow the card holder to convert those points to shopping vouchers.
Frequent Flyer Rewards
Frequent Flyer is one of the most popular types of rewards. Card holders earn points on spending, then can convert those points to an account held with a frequent flyer partner. In some cases, such as the Qantas cards, the card holder earns points directly into the frequent flyer partner account as it is linked directly to the credit card. We’ve included cards that have at least one frequent flyer partner and allow points to be converted into Sydney to Melbourne flights.
Most credit cards charge a fee to spend money overseas, sometimes multiple fees. We’ve looked at the two main fees: currency conversion, which gets charged as a percentage of any transaction in a foreign currency, and the fees for taking money out at the ATM. Using this, we’ve made an estimate of how much it could cost to take out the equivalent of AU$300 from an overseas ATM. From this, we have defined ‘Good For’ Overseas Spending as cards that charge $10 or less for this, which is around 3%.
Perks are all the extra benefits that Platinum and other premium cards offer. This includes perks such as free travel insurance, or purchase protection – the latter, a type of short-term insurance policy for items you buy with the card. We’ve included cards that offer at least one perk out of the selection that we track.
This is a list of the cards that offer a special introductory deal for new spending. The rate, such as 0%, applies to new purchases on the card and will be for a limited time, such as 6 months. After this, the standard ongoing interest rate will generally apply. Most deals are for new customers only and some deals have other conditions attached so make sure you check these on the provider’s site before applying.
Balance Transfer Offers
A balance transfer is when you take the debt from one credit card and transfer it to a new one. Many providers offer a special deal for new customers transferring a balance. The rate, such as 0%, applies to the balance that is transferred to the card and will be for a limited time, such as 12 months. After this, a higher ongoing interest rate will apply. Most deals are for new customers only and some deals have other conditions so make sure you check these on the provider’s site before applying.