*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.
Fair Comparison compares loan products from a range of banks and other financial or credit product providers and does not compare all products in the market or all product features. To filter the results, you will need to enter some basic information which will generate a comparison of products that fall within those parameters. The default ordering of products is based on reward rate. Fair Comparison do not take into account your objectives, financial situation or needs, or provide advice, assistance or recommendations.Learn More
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...
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.
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.
While each credit card provider offers their own program, you can generally expect to redeem your points on the following sorts of things:
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:
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.
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:
|- 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.
|- 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.
|- This details how many points you earn on purchases you make with the card.
Some of the pros are:
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.
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.
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.