Since 1 October, the RBA’s credit card surcharge ban has been in play, including a cap on the back-end fees banks earn every time you tap. Less money for the banks has meant less for you, with lenders slashing points and perks on their rewards cards in recent weeks.
That card that’s been faithfully earning you points for years? It might not be earning its keep anymore so now could be the time to take your credit card shopping.
The good news is there are some decent deals around, depending on what you’re after.
A points chaser? Look at sign-up offers
Unless you’re spending thousands of dollars on your card every week, the best bang for your buck is increasingly in the sign-up bonus, rather than the ongoing points you earn from everyday spending.
They’re the one perk that has largely stayed intact following the shake-up, as banks still want new customers through the door.
NAB is leading the charge with 180,000 points on its Rewards Travel card, worth about $500 in gift cards.
Credit card sign-up offers | ||||
|---|---|---|---|---|
Card | Sign-up points | Other perks | Annual fee | Rate |
NAB Rewards Travel | 180k (yrs 1 + 2) | $395 | 22.49% | |
Westpac Altitude Black (also St. George, Bank of Melbourne and Bank SA) | 150k (yrs 1 + 2) | $95 off 1st yr annual fee | $370 | 23.98% |
ANZ Rewards Platinum | 125k (yrs 1 + 2) | $50 credit | $149 | 22.49% |
Source: Canstar.
There are still some hefty frequent flyer offers, too. Depending on the card, you can pick up as many as 150,000 Qantas or Velocity points just for signing up, and Westpac has even added 50 Qantas status credits, which you’d normally only earn by flying.
Frequent flyer credit card sign-up offers | |||
|---|---|---|---|
Card | Sign-up points | Annual fee | Rate |
Westpac Altitude Qantas / Velocity Black | 150k Qantas Points / Velocity Points (yrs 1 + 2) | $450 | 23.98% |
Qantas Money Titanium | 120k Qantas Points | $1,200 | 20.99% |
Amex Qantas Ultimate | 120k (yrs 1 + 2) | $450 | 23.99% |
Source: Canstar.
Watch for the catches behind the big points
First up, don’t assume you’ll get all your points straight away.
Some providers now spread sign-up bonuses over at least 12 months. Take the Westpac Altitude Qantas Black card: you can earn 90,000 points initially, but you’ll need to keep the card for 12 months to receive the remaining 60,000.
That can mean paying another annual fee just to get the rest of the reward. It also makes it harder to jump from one sign-up deal to the next.
Then there’s the spending requirement. Many cards require you to spend $5,000, or possibly more, in the first three months to qualify for the bonus. If that means buying things you wouldn’t otherwise buy, the points might not be worth it.
And finally, there’s the annual fee.
That Westpac card comes with an ongoing annual fee of $450. Keep it for 10 years and that’s $4,500 in fees. Suddenly, those free points don’t look quite so free.
The lesson? Don’t get so caught up in the size of the bonus that you forget to do the maths.
A frequent traveller? You’re paying more for card perks so weigh up what you value most
Sign-up points can help get you on your way, but the card that gets you there isn’t necessarily the best one to use while you’re overseas.
It really comes down to what you value most.
If airport lounge access is your thing, there are still 18 cards on Canstar offering lounge passes. But you’ll pay for the privilege, with the average annual fee on these cards topping $400.
Travel insurance could be another big consideration. At least 10 cards still offer what you’d consider decent cover, including at least $20 million in medical cover and reasonable protection for luggage and trip cancellations. Just remember to check the policy details and eligibility requirements before relying on it.
And then there’s the cost of spending in another currency. Many credit cards charge around 3 per cent to 3.5 per cent every time you make a purchase in a foreign currency. That can add up quickly when you’re paying for hotels, meals and shopping overseas.
The good news? Canstar has about 12 credit cards with no currency conversion fee, including options from NAB, CBA and Bendigo.
So if you’re planning a trip, think beyond the points. A card with no foreign currency fees could save you money every time you tap, while travel insurance or lounge access might be worth paying for if you’ll genuinely use them.
Examples of cards offering travel insurance | ||||
|---|---|---|---|---|
Card | Currency conversion fee | Travel insurance | Travel perks | Annual fee |
NAB Rewards Travel | 0% | Yes | 2 airport lounge passes per yr | $395 |
Bankwest More World | 0% | Yes | 10 lounge passes per yr | $270 |
Bendigo Ready | 0% | Yes | $0 | |
Great Southern Bank Platinum | Yes | $144 | ||
ING Orange One Rewards Platinum | 0% | Yes | $149 | |
CBA Ultimate | 0% | Yes | $300 travel credit per yr + 2 lounge passes per yr | $420 |
Source: Canstar.
Carrying debt on your card? Skip rewards and go low cost
Australians collectively have $18.95 billion in credit card debt that’s attracting interest charges. And if you’re carrying a balance on a high-interest rewards card, the interest charged can quickly wipe out the value of any points or perks you earn. In that situation, a low-rate card is a much better place to start.
If you’re struggling with credit card debt, a low-cost option might be a good option.
There are three cards on Canstar with ongoing interest rates below 10 per cent: the Defence Bank Foundation card at 8.99 per cent, the Westpac Lite card at 9.90 per cent and the Greater Bank Visa card at 9.95 per cent. That number is set to fall to two, with Westpac preparing to increase its rate to 11.99% from 30 November.
Of course, a lower rate doesn’t make carrying debt a good thing, and it’s worth checking all fees and conditions. But if you can’t pay your balance in full, reducing the interest you’re charged should come before chasing rewards.
Above all, is your credit card still earning its keep?
Before you sign up for another credit card, take a step back and think about why you have one in the first place.
Is it for emergencies? For travel? To earn rewards on the spending you’re already doing?
There’s no one-size-fits-all answer. The best card for you will depend on how you use it, what you value and whether the benefits outweigh the costs.
If you love rewards points, a card with a generous sign-up offer could still be worth a look. If you travel regularly, lounge access, travel insurance or no foreign currency fees might deliver more value. And if you’re carrying debt, a low-rate card could help reduce the interest you’re paying.
The key is to look beyond the headline offer and get into the details. Consider the annual fee, interest rate, spending requirements and any conditions attached to the perks. A card that looks great on paper might not be the best fit for your wallet.
And don’t forget to compare the alternatives. Sometimes a lower-fee card could leave you better off, even if it offers fewer bells and whistles. Or maybe even no credit card at all.
For example, if you're paying $500 a year for a rewards card, that’s $500 you could put towards everyday expenses, savings or your mortgage instead. Over 25 years, putting an extra $500 a year towards a $600,000 mortgage could save you around $16,000 in interest, based on our calculations.
So don’t stick with your credit card out of habit. Take a fresh look at what’s around and make sure the card in your wallet is still working for you, not just for your bank.
