Reward Credit Cards

Comparing rewards credit cards could be an avenue you might like to take when it comes to unlocking some extra features and benefits in your day to day life. We’re here to guide you on the ins and outs of rewards credit cards so you can confidently find one that suits you.

*iSelect (through its wholly owned subsidiary, Tyrian Pty Ltd) and Fair Comparison Pty Ltd (which operates this credit product comparison) may receive a commission if users click through, apply, or successfully qualify, for a loan or credit card product from or through a provider.

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  • Rewards Rate
  • Longest Purchase Period
  • Longest Balance Transfer Period
  • Lowest Cash Advance Rate

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If you’ve ever applied for a rewards credit card, you’ll know that banks, credit unions, and lenders offer different types of rewards and incentives to encourage you to sign up with them.

And even if you’ve never applied for one, or never considered it, you might like to learn about the different features and benefits rewards credit cards offer in case you come into a position where some rewards might pay off for you in your day to day life.

Perhaps you love going to the cinema? Or do you buy a lot of your clothes at department stores? Perhaps you’re moving out and wouldn’t mind a few extra bits and pieces around the house...

What is a rewards credit card?

For the uninitiated, a rewards credit card is a credit card from either a bank, credit union, or lender that allows you to earn points for every dollar you spend with their card and redeem them on different rewards that are offered within their rewards programs.

These rewards are typically different types of goods, merchandise, gift cards, and event tickets. You might also earn things that you probably need, but never remember or can be bothered to go out of the way to buy for yourself – things like a KitchenAid, a Dyson, or a portable bluetooth speaker (a.k.a: modern-day boombox).

These cards usually have an annual fee, which can vary widely from as little as $35 to as much as $1,200.

Because there are so many different credit card providers out there, they all aim to entice customers with their rewards programs in different ways.

How does a rewards program work?

Each time you make an eligible purchase with your shiny rewards credit card, you earn points for each dollar you spend. These points add up and up and up to the point where you have enough to redeem on a range of goods and merchandise.

For example, you could earn one reward point per dollar, but some providers offer more than that, such as double-points at department stores and even triple-points on overseas purchases.

What are the types of credit card rewards?

While each credit card provider offers their own program, you can generally expect to redeem your points on the following sorts of things:

  • Gift cards – Big supermarkets and retailers often participate in these programs
  • Merchandise – Retailers and suppliers often team up with credit card providers to put their goods towards rewards programs.
  • Household items – Score yourself a new BBQ, coffee machine, screwdriver set… whatever else you might need around the house.
  • Entertainment – Choose from movie ticket bundles, magazine subscriptions, and wine deliveries.
  • Technology – Upgrade to a new smartphone, speaker, or laptop.

How do I choose a rewards credit card?

There are definitely a few things you should consider when it comes to choosing a suitable rewards credit card for you. Some of these include:

  • the type of rewards you’re looking for;
  • your income;
  • the annual credit card fee;
  • your daily, weekly, or monthly spending habits;
  • how well you budget for repayments; and
  • your preferred credit card provider.

And if you have any other debts, usually providers will consider these when they look at your application. So if you have a low credit score, this could make it harder for you to successfully apply for a rewards credit card.

For more information on how you can check your credit score, follow the Australian Government’s Moneysmart guidelines here.

What features are worth considering when comparing rewards credit cards?

When you’re ready to start looking, it’s important to remember that there are different fees to consider with rewards credit cards. The table below details what you should look out for:

Purchase rate- This is how much interest a purchase is charged by your issuer if you don’t make a full, on-time payment.
Cash advance rate- If you withdraw cash from an ATM, you might incur a fee for doing so.
Annual fee- Providers usually charge a fee for using the card each year.
Balance transfer rate/fee- Providers typically charge a fee if you choose to transfer an existing balance to them. It’s usually around 3 to 5% of that balance.
Minimum repayment amount- This is the minimum amount you’ll need to pay each time you get a statement for the money you owe. It’s usually around 2% or $20 of the total.
Earn rate- This details how many points you earn on purchases you make with the card.

What are the pros and cons of a rewards credit card?

Some of the pros are:

  • If you’re already a frequent shopper, you earn rewards for your spending habits.
  • If you regularly shop at certain supermarkets or department stores, a rewards credit card could be a good way to benefit from bonus gifts and membership rewards.

Some of the cons are:

  • Rewards credit cards can come with high interest rates compared to other cards, so if you’re not on top of your repayments, you could land yourself into unwanted debt.

  • If you’re on a tight budget, this type of card might hinder rather than help your saving goals.

Are rewards credit cards worth it?

The good news is that if you’re generally financially diligent and you take care of your bills and repayments on time each month, a rewards credit card could be worth it for you.

Rewards credit card carriers generally earn one reward point per dollar spent, and can redeem these points on a range of merchandise, gift cards, entertainment, household items, technology, and even cashback.

But if making late repayments or missing them altogether is something you tend to do, then you might be penalised and end up making higher repayments than necessary. In these events, you could be charged at the purchase rate of your rewards credit card, which tends to be quite high.

Ultimately, when you start comparing rewards credit cards, make sure you’re interested in the specific rewards that are offered by the provider. Otherwise, you might end up earning points and getting rewards that don’t suit you or don’t match your expectations.

Keen to be rewarded?

If you’re ready to compare rewards credit cards, you can start here online with iSelect. See the range of providers and simply click on an option that suits you to begin your application.

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You can use our comparison tools to compare from our range of providers and their products.*