We’ve crunched the numbers on the highest-earning frequent flyer cards

We’ve crunched the numbers on the highest-earning frequent flyer cards

As banks quietly shake up the credit card landscape by hiking interest rates and shaving earn rates on some rewards schemes, RateCity.com.au has crunched the numbers on the highest-earning frequent flyer cards.

Yesterday, Westpac increased interest rates on most of its credit cards by 0.25 per cent, following a similar move by its subsidiaries St. George Bank, Bank of Melbourne and Bank SA last month which hiked some rates by 0.25 per cent.

Bankwest is also reducing the number of Qantas Frequent Flyer points that can be earned on its Qantas Mastercards from 22 May 2019. The move follows on from American Express’s announcement last year that it would overhaul its rewards offering in April 2019. 

Meanwhile, some card providers are offering huge sign-up bonuses and attractive points-per-dollars spent in a bid to inject life into a slowing credit card market.

New research from RateCity.com.au has revealed some of the highest earning frequent flyer cards for people spending $20,000 per year over three years.

Qantas Money’s Qantas Premier Platinum card topped the RateCity.com.au list, with an earn rate of 1 point per dollar on all purchases up to $10,000 per month and a sign-up bonus of 100,000 points in the first two years. This card offered the highest gain of $1,913 after three years. The research factors are based on someone redeeming the points for Sydney-Melbourne flights and factors in the cost of the annual fee, however it assumes the person is not paying interest on the card.

Sally Tindall, research director at RateCity.com.au said the changes are a timely reminder for people to check they’re on the right card.

“There are a lot of cards offering huge sign-up bonus points but many of them come with a catch. Every card in our top five list had a relatively high interest rate and a hefty annual fee.

“Credit card numbers are on the decline so it’s no wonder lenders are throwing in serious sweeteners to get new customers in the door,” she said.

“If you are looking to reassess your credit card, try and pick one that compliments your spending habits. The last thing you want is a credit card that sends you financially backwards.”

Things to look out for with frequent flyer cards:

  • Rewards – don’t sign up to a frequent flyer credit card if you’re someone who doesn’t fly often. If you’re not using the points, then you’re likely to be shelling out money for nothing.
  • Fees – many of the frequent flyer cards discount the annual fee in the first year. But be aware, all of the cards in our top list had ongoing annual fees of at least $129;
  • Interest rate – most frequent flyer cards have high interest rates attached, so if you are someone who has even a dollar of debt on your card, then you could be better off ditching rewards in favour of a low rate card.

Some of the highest earning frequent flyer cards – based on an annual spend of $20K after 3 years

Lender

Card

Earn rate

Sign up bonus

Conditions for bonus points

Annual fee

Interest rate

Estimated gain ($) after 3 yrs based on $20K annual spend

Qantas Money

Qantas Premier Platinum

1 point per dollar on everyday purchases up to $10,000 per month, 0.5 points thereafter. 1.5 points on International purchases, 1 additional point on select Qantas products.

70,000 first yr
30,000 2nd yr

70,000 points awarded when $3,500 is spent within 90 days of card approval plus 30,000 points awarded on your first anniversary

$149 in first yr then $299

19.99%

$1,913

Virgin Money

Virgin Australia Velocity Flyer (Points offer)

0.66 points per dollar up to $1,500 per month, 0.5 points thereafter

                           75,000

if you spend $1,500 every month in the first 3 months from approval (you will receive 25,000 Velocity points each month)

$64.50 in first yr then $129

20.74

$1,688

ANZ

Frequent Flyer Black

1 point per dollar on the first $7,500 per month, 0.5 points per dollar thereafter

100,000 points and $200 cash back

when you spend $4,000 on eligible purchases in the first 3 months from approval.

425

19.99

$1,585

American Express

Qantas Ultimate Card

1.25 points per dollar for most purchases. 2.25 points Qantas products and services, 4.25 points Qantas wine, 0.5 govt bodies. Also offers $450 travel credit a year

                        100,000

if you spend $3,000 on eligible purchases within the first 3 months from approval. This offer is available to new Card Members only

450

20.74

$1,559 plus $450 worth of travel credit per year

St George, Bank of Melbourne, BankSA

Amplify Signature (Qantas)

0.75 points per dollar uncapped.

                           80,000

if you spend $4,000 on eligible purchases within 90 days of card approval

$179 in first year then $279

19.74

$1341 plus up to 10% bonus points depending on your birthday

 Source: RateCity.com.au. Correct as at 1 May, 2019 and subject to change. 

Notes: 

This scenario is modelled on a cardholder with an annual spend of $20K per year, or $1667 per month. We looked at cards that were directly linked to Qantas and Virgin frequent flyer programs in the RateCity database.

The total gain / loss is the dollar value of the points earned in 3 years, minus the cost of the annual fee. It does not include any interest charges or late payment fees.

For cards that tier your points depending on where you spend, we have assumed the points earned were at the standard rate, with the exception of cards that allocate higher points for everyday purchases of food and petrol which we have factored in as 1/3 of the monthly card spend.

Sign up bonus points were not allocated where the cardholder would not meet the spend conditions, based on a monthly spend of $1667.

The value of the points were calculated for both Qantas and Virgin, based on a Sydney – Melbourne flight, 6 months out, on a Saturday at 8am, returning on the following Saturday at 4pm.

Specials whereby the card issuer waives or reduces the annual fee in the first year were taken into account.

Sign up offers of cashbacks were included in the calculations and deducted from the annual fee costs. Annual travel vouchers which have more onerous terms and conditions than points were not included but noted at the end.

Cards have a range of additional perks such as insurances, fraud protection, conceirge services, airport lounge passes which have not been taken into account.

For St George / Bank Melbourne / Bank SA Amplify Signature the final total does not take into account birthday points which varies according to a person’s birthday.

Where there are bundle cards (in the case of Westpac) we have assumed they applied for both cards at the same time and the spending is split evenly between the 2 cards.

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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.

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.

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.

Can I get a credit card on part-time/casual work?

Yes, as credit card providers look at your annual income amount as well as your occupation. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.

How to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

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.

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

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.

Where can I get a credit card?

Looking to get your first credit card? You might be confused as to exactly where to go to apply for one. Here’s where to go when you are ready to put in that application.

The bank: Your bank is a great place to start, provided that you have a good banking history. Since you already have a financial history, you have more chance of your application being approved.

Credit card provider: Another option is to apply for a credit card directly from the issuer, such as Visa, Mastercard or Amex. This will most likely be an online application, so do your research and apply for a suitable card for your circumstances.

Major retailers: Coles, Woolworths, Myer and David Jones all have credit cards available. But watch out for the interest rate and annual fees – these cards are designed to help you spend more in store.

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. 

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 apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

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.