These frequent flyer credit cards have a $0 annual fee

These frequent flyer credit cards have a $0 annual fee

Want something for nothing? There are five credit cards that give you just that – provided you pay off your entire bill each month.

Between them, American Express, BankVic and HSBC have five frequent flyer credit cards that don’t charge annual fees (see table below), according to a RateCity analysis of the credit card market.

So if you limit yourself to spending that you were going to do anyway, and if you make sure you always repay your debt during the interest-free period, you’ll accumulate frequent flyer points without burning money on extra purchases, fees or interest.

There are also another four credit cards – from Westpac and HSBC – that entice customers with a $0 annual fee in the first year, before charging an annual fee from year two onwards.

Provider Card Annual fee Interest rate (ongoing) Interest-free days (max.) Points per $1 spent (max.)
American Express Essential Credit Card $0 14.99% 55 1.25
BankVic Qantas Visa Credit Card $0 16.95% 55 2
HSBC Premier World Mastercard (Rewards Plus) $0 19.99% 55 1.5
American Express Velocity Escape Card $0 20.74% 55 1.75
American Express Qantas Discovery Card $0 20.74% 44 1.75
HSBC Platinum Qantas Credit Card $0 for 12 months than $79 19.99% 55 1

Westpac

Altitude Platinum Bundle (Altitude Rewards) $0 for 12 months than $150 20.49% 45 3
Westpac Altitude Platinum (Altitude Rewards) $0 for 12 months than $150 20.49% 45 1
Westpac Altitude Platinum (Altitude Qantas) $0 for 12 months than $150 20.49% 45 0.5

Credit card comparisons are hard

Comparing frequent flyer credit cards can be tricky, because it can be hard to work out how many points you are likely to accumulate through your regular day-to-day spending.

For example, the American Express Qantas Discovery Card has three different earning rates:

  • 1.75 points per $1 spent with Qantas
  • 0.5 points per $1 spent at government bodies in Australia
  • 0.75 points per $1 spent on all other purchases

credit card stack 2

Another thing that makes comparisons hard is that there are not one but two main frequent flyer programs – Qantas Frequent Flyer and Velocity (linked to Virgin).

Just as 1 Australian dollar and 1 American dollar have different purchasing power, so do 1 Qantas point and 1 Velocity point. For example, a Sydney-Melbourne one-way ticket costs 8,000 Qantas points and 7,800 Velocity points (plus any additional taxes, fees and carrier charges).

To make things even more complicated, while some credit cards allow you to directly earn Qantas or Velocity points, others give you their own in-house points, which you then have to convert into Qantas or Velocity points.

For example, every $1 you spend with the HSBC Premier World Mastercard (Rewards Plus) will earn you up to 1.5 HSBC Rewards points. It then takes 2 HSBC Rewards points to ‘buy’ 1 Velocity point.

So $1 spend = up to 1.5 HSBC Rewards points = 0.75 Velocity points.

Don’t fall into this credit card trap

One trap some people fall into is buying things they wouldn’t otherwise buy, in the belief they’re ‘making money’ with these extra purchases because they’re earning frequent flyer points.

Frequent flyer points are only ‘free money’ if your credit card doesn’t cost you money to hold. That means not making extra purchases, not paying fees and not paying interest. If you meet those three conditions, then, yes, you really are getting something for nothing.

Money trap

However, making extra purchases just to earn points is the exact opposite of ‘free money’, because the amount you have to spend exceeds the amount you get back.

Take the BankVic Qantas Visa, for example, where everyday spending will earn you 0.5 Qantas point per $1.

Imagine you wanted to accumulate enough Qantas points to get a free flight from Sydney to Melbourne. In that case, you would need 8,000 points – and to save that many points, you would need to do $16,000 of everyday spending.

Effectively, then, you would need to spend $16,000 with your BankVic Qantas Visa to get a Sydney-Melbourne airfare.

However, if you were to buy the ticket with money, rather than points, it would cost just $149.

That isn’t to say the BankVic Qantas Visa is a bad frequent flyer credit card. Rather, using it (or any other card) to ‘buy’ points is a very expensive idea.

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Learn more about credit cards

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

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 easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

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 do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

How many numbers are on a credit card?

The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14. 

The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid. 

Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.

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.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

What is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card.