Are credit card rewards worth it?

Merchandise, cash, frequent flyer points and “exclusive” offers: the rewards available, just for flashing the plastic, are extensive. But – are they worth it? Each year we crunch the numbers on rewards; this year we looked at 136 rewards programs from 43 providers. The verdict: Yes, the rewards are there – particularly if you’re a big spender.

What if I use my credit card just to claim the points?

Say you wanted to put all of your purchases on your credit card and pay it off each month in order to earn the maximum number of rewards points possible. Is it worth it? What would you need to watch out for?

Well, there are a few things to remember. We’ve explained these below.

Are the rewards on credit cards worth the annual fee?

The more you spend on a credit card, obviously, the more valuable a rewards program is, but you could be surprised at just how much you do have to spend to earn the points. At a slightly “above average” spend level of $24,000/year, you’re not doing much more than breaking even on many rewards programs, once you take into account the annual fee. If you’re spending less than that, you may be going backwards!

Annual fees on rewards credit cards are typically much higher than on non-rewards cards. A rewards card may therefore not be worth it if…

  • If you don’t spend enough to earn that many rewards
  • If the number of rewards points you can earn is capped too low
  • If points expire too early
  • If it is difficult to redeem the points

The average rewards on offer for consumers at three spending levels ( $24,000 per annum, $60,000 per annum and $120,000 per annum) are as below:

Annual Spend Level




Rewards Profile

Return After Fees

Return After Fees

Return After Fees


$  111.14

$   331.21

$   642.50


$  113.94

$   351.43

$   692.31

Frequent Flyer

$  159.52

$   399.84

$   879.66

What about cards with a better Canstar star rating?

The picture looks a lot brighter when we only compare the net reward return given by the products that received our 4- and 5-star ratings. For Frequent Flyers, the percentage return after fees nearly doubles to 1.19% ($286.06) on a spend of $24,000. On a $60,000 annual spend, you can expect a return of 1.29% ($771.76), and on $120,000, the average return is 1.44% or $1,722.32.

Cash and general merchandise returns also increase considerably in all spending profiles of 4- and 5-star rated products. This reinforces the importance of pairing up with the right card that may potentially double your rewards for the same effort.

How to choose credit card rewards

Naturally, it makes sense to gravitate towards the kind of rewards that appeal to you when choosing the right card and rewards program. Aside from rewards appeal, factor in how much you spend on the card per year. A realistic total of “card rewards vs card cost” will give you added information about the value you can expect from some programs. We’ve explained how to choose a credit card rewards program here.

So focus intently on what each card can offer YOU individually. By taking a careful inventory of your lifestyle and spending habits, you can select the card that will provide the most rewards for what you already do—which is the whole point. Avoid the common mindset of impulsively signing up for a card that “sounds good” and then trying to change your behaviour to benefit from it.

Want to compare credit card rewards? Check out our most recent Credit Card Rewards Star Ratings report here, or compare Rewards Credit Cards on our website:

Learn more about Credit Cards

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