Unrewarding! Australia's Credit Card Rewards Programs Fail Consumers

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New consumer tool reveals best and worst rewards credit cards For thousands of Australians, the promise of a free flight, shopping or cash rewards makes choosing a rewards credit card over a traditional credit card seem like a good choice. However, fresh new research by financial comparison website, mozo.com.au, reveals that the large majority of rewards credit card programs are failing to offer people real value from their rewards in a year.

"We knew there were going to be some rotten deals out there, but we were shocked to discover that for the average cardholder rewards cards on the whole just aren’t worth chasing."

For thousands of Australians, the promise of a free flight, shopping or cash rewards makes choosing a rewards credit card over a traditional credit card seem like a good choice. However, fresh new research by financial comparison website, mozo.com.au, reveals that the large majority of rewards credit card programs are failing to offer people real value from their rewards in a year.

Mozo’s Rewards Reveale, launched today, is the first tool of its kind which takes into account a person’s individual spending habits and preferred rewards type (flights, cash back or shopping vouchers) and provides them with ranked results which detail the best and worst rewards credit cards for their situation.

Rohan Gamble, managing director of mozo.com.au said: “Given that rewards credit cards usually attract higher interest rates and annual fees we really felt that it was time someone cracked the ‘rewards code’ and made it easy for Australians to see what they’re really getting for their money.”

“And we’re absolutely gobsmacked by the results,” added Gamble. “We knew there were going to be some rotten deals out there, but we were shocked to discover that for the average cardholder rewards cards on the whole just aren’t worth chasing.”

“There are even some cards where you are worse off holding the card because you are actually charged more in fees than they return in value. That doesn’t sound very rewarding to me!”

Mozo’s analysis highlights that your annual spend level makes a massive difference when selecting a rewards credit card. While this may seem like common sense (the more you spend the more points you earn), the analysis revealed that there are good and bad cards at each spend threshold and that no one credit card is best, so it’s important to find the right card for your personal situation.

Using the average annual credit card spend of $14,000 (based on RBA data*), Mozo used its Rewards Revealer™ to see which rewards cards offer Australians real rewards value. The results are eye opening, with only two of the 76 cards available (after taking into account annual card fees) offering rewards over $100 in net value per year. And even worse, 15 cards came out negative, with annual fees overriding the rewards value.

The top ranking rewards cards (not including Platinum cards) based on the average annual credit card spend are:

  •     American Express Blue Sky Credit Card
  •     Myer Visa Card
  •     Jetstar Mastercard

For people who spend over $50,000 a year on their credit card, rewards cards are more appealing, with the big banks offering some of the best rewards programs. However, even at this spend level the difference in net rewards value is over $1000 a year so it is important to shop around. The top performers (including platinum cards) are:

  •     Citi Emirates Platinum
  •     Westpac Singapore Airlines Platinum
  •     Jetstar Platinum Mastercard

“This analysis really highlights that for the average Australian rewards cards just don’t make much sense. Our advice to everyone is to look at their annual spend level and shop around for a card that will deliver real value for them, not the illusion of value.”

Mozo’s Rewards Revealer™ compares 99 rewards cards from banks, credit unions, retailers and airlines and covers all card types: Visa, Mastercard and American Express. The tool can be accessed at: mozo.com.au/credit-cards/rewards

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Kylie Moss
mozo
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