Credit cards with attached rewards programs can be a great way to earn money and bonuses on your everyday spending. But depending on the rewards program and card chosen, the rate by which you can earn rewards points varies.
The table below displays a snapshot of the rewards credit cards on Canstar’s database with links to providers’ websites, sorted by star rating (highest first). Please note the results are based on a monthly spend of $2,000.
In the past 12 months, you might have noticed changes in the returns you’re getting on your rewards card. This is due to changes made by the Reserve Bank of Australia (RBA) that came into effect on July 1 this year.
The RBA has capped interchange fees at a maximum of 0.80%, causing many banks to lower the value of their rewards programs to recuperate some of these losses.
Interchange fees are fees paid whenever you purchase something using a credit card or debit card. It’s like a processing fee paid to your bank by the bank of the business you made the purchase from.
Interchange fees compensate the bank for facilitating the cost of electronic payments.
Canstar recently performed an analysis of how these changes have affected rewards programs on business credit cards, but what about travel credit cards? Will you be earning more or less on overseas purchases than you were before this change?
Let’s find out.
Rewards on Travel Credit Cards
You’ve spent months building up your frequent flyer points and rewards points and now you’re ready to board a plane and head to the country you’ve always wanted to visit. The good news is you can keep earning rewards points on purchases while enjoying yourself overseas.
There are a handful of rewards credit cards that offer additional points for transactions made in an overseas currency, although you’ll have to bear in mind the various fees and charges you can accrue on your travel credit card.
Most rewards credit cards offer around 1 point per dollar on eligible purchases in Australia – you can compare rewards card on our site to find ones with a higher return. There are some cards that offer higher returns and extra points if you shop overseas. So if you travel frequently or plan to buy a bunch of goodies on your holiday, then a travel credit card with a high rewards return on overseas purchases can be worth considering.
The table below shows the travel credit cards Canstar rates that have a points based rewards program, sorted by Star rating (highest first).
Travel credit cards rewards value – 2016 vs 2017
In order to work out just how much the value of travel credit card rewards has changed, Canstar Research has calculated the minimum, maximum and average reward returns travellers could have earned this year and compared it with these figures from 12 months ago, based on a $10,000 spend over two trips with a total of 20 transactions made per trip.
Table: Reward Return based on overseas spending on credit cards
|Maximum Reward Return||Average Reward Return|
|Change||Decreased by $244.21||Decreased by $38.55|
|Source: www.canstar.com.au (04/08/2017). Based on the points earned on $10,000 of foreign currency purchases and converted to a dollar value based on the programs reward point currency.|
The results show that on average, current rewards programs on travel credit cards (post fee changes) will earn roughly $78 in rewards on an overseas trip, $39 less than the average return from a year prior.
On average, 2016 saw a healthy maximum return of $421 over 12 months, compared to $177 for 2017 – a sizeable decrease
How to compare travel credit cards
Rewards aren’t the only thing to consider when looking for a travel credit card, although they can certainly be useful. As you can see in the above table, the reward return can vary based on the credit card chosen, so it is important to not only consider the reward component but also the additional features the credit card offers.
Canstar compares hundreds of credit and debit cards used by travellers on a number of factors, with a focus on the interest rates, fees and features that are useful for those travelling overseas.
Useful features that travel credit cards can come with include:
In addition to these handy features, you may be interested in looking for a card that comes with minimal (or even non-existent) fees. This article provides an outline of the fees you can expect to pay on both travel credit & debit cards.
To find a travel credit card that has an acceptable combination of rates, fees (or lack thereof) and features, check out what’s out there on the Canstar website:
You can also compare travel money cards with Canstar, a different yet popular method of spending money overseas.