How do I find the best rewards credit card?

Updated on 17 Sep 2020

How to choose a credit card rewards program

With so many rewards credit cards to choose from, it’s a good idea to step back and first consider what you want to get out of your credit card spending. Are you looking to boost your frequent flyer points balance, get cashbacks and gift cards or buy items directly with the rewards points?

If you’re looking for flight redemptions, your best bet is generally to go with a card that lets you earn frequent flyer points directly. Check out our Frequent Flyer comparison page for a great range of frequent flyer credit card offers.

If you’re after cashbacks, buying items with rewards points or gift cards, then you’re on the right page. From here, there are two points to consider when comparing offers:

  1. What is a rewards point worth?
  2. How many rewards points can I earn?

1. What is a rewards point worth?

Not all points are created equal. The value of a point will differ between different rewards programs, and within the rewards program, the value of that point will differ depending on the type of redemption.

Depending on whether you choose to redeem a cashback to your credit card, use the points to buy a gift card or perhaps an item from the rewards shop, you’ll find that the value of the points in dollar terms can differ greatly. If you compare a $100 cashback value with a $100 gift card, you may find that within certain programs, this can actually cost you more in points. Similarly, if you’re looking to buy a pair of headphones with your points, take a look how much it costs and compare how many points you’d need to buy a gift card of the same value. It may be worth getting the gift card for a major retailer and buying the headphones with the gift card.

In order to quantify the value of different rewards programs, we looked at the points cost of $100 in gift cards* across major programs to come up with a “dollar value” of the points you earn. We considered popular retailers such as David Jones, JB Hifi, Myer, Woolworths, Amazon, Bunnings and Caltex. Below are the average point redemption values for these programs.

Rewards ProgramPoint Value$100 in gift cards (average)
ANZ Rewards0.45 cents22,225 points
NAB Rewards0.52 cents19,230 points
Velocity Frequent Flyer0.51 cents19,499 points
Commbank Awards0.48 cents21,000 points
BOM Amplify0.45 cents22,200 points
Westpac Altitude0.44 cents22,950 points
Qantas Frequent Flyer0.43 cents23,521 points

From the above we see that average point values range from 0.43 cents per point to 0.52 cents per point with NAB Rewards coming out on top and Qantas Points having the least value per point.

Before making a decision on one program over another, multiply your estimated points earned by the Points Value. For example, if your estimated points earned comes to 200,000 Westpac Altitude points, this equates to approximately 88,000 cents or $880 worth of gift cards. In contrast, 200,000 NAB Rewards however are worth $1040.

*Note the table is an estimation current as at April 2020, which may change from time to time and you’ll need to do your own checks before redeeming your points to make sure you’re getting the best value. Where a $100 gift card was not available, lower values were combined to make up the $100. Higher value gift cards often have better points redemption rates, however these were not considered in order to standardise the comparison.

2. How many rewards points can I earn?

Now that you know how much a point is worth, the next step is to figure out how many points you can earn. The good news is, we’ve done the hard work for you. Use our Rewards Credit Card comparison above to input your eligible monthly spend and find out how the credit cards compare.

If you really want to dig deeper into the estimated dollar value of the points you’ll earn, multiply the number of Total Points (in the last column of the comparison table) by the Point Value to get an indication of the total amount of points you could earn. For example, $3000 of eligible monthly spend could earn you 195,000 Altitude points on the Westpac Altitude Black credit card. The estimated value of these point is 195,000 x 0.44 cents, which equals 85,800 cents or $858.

So, which rewards program should I pick?

Choosing a rewards program can sometimes be a little subjective. Do you already have a home loan and prefer to keep all your banking in one place? Or are you invested in a particular rewards or frequent flyer program, and want to keep earning more of those points? Or are you happy to explore all the rewards programs and find out what you could be missing out on? Once you know what you’re after, simply use the filters in our Rewards Credit Card Comparison above and find out how the cards stack up against each other.

Everything you need to consider when picking a rewards credit card

Now that you’ve picked a rewards program and have got a better understanding of the value of a rewards point, here’s everything you need to consider before picking a new credit card.

1. Is a high annual fee worth it?

Some rewards credit cards come bundled with great features – and high annual fees to boot. Is it worth it paying more for a premium card? That depends on whether you can afford to pay the fee upfront, and whether the benefits (the dollar value of the points redeemed) outweigh the cost of the card. This will differ greatly based on the way you spend on the card. Take advantage of our credit card comparison tool above and select your monthly spend from the inputs above to see how the cards stack up.
Note that larger fees are often coupled with greater rewards earning potential, more bonus points, and in some cases, annual gifts such as complimentary flights or lounge access. As a result, it’s a good idea to keep in mind the value of these items and decide whether you will actually use them.

2. Can I afford to repay what you’ve spent on your credit card?

While there are so many great credit card offers to choose from, the important caveat is that if you don’t regularly pay off your credit card in full, you’ll be paying interest charges which eat into the value of the points you’ve earned. If you can’t afford to pay off the amount you’ve spent on your credit card in order to reach a bonus points target, it’s probably not a good idea for you, and you might be more interested in our Balance Transfer, Low Rate or No Annual Fee credit cards. If you’re already on top of your spending, then a Rewards or Frequent Flyer credit card is a great way to maximise your everyday spending.

3. Can I meet the spending requirements for bonus points?

Rewards cards often come with bonus points offers that give you a lump sum of points for meeting certain spending thresholds. To maximise the value of a credit card, you need to ensure you’re able to meet these thresholds. To see how many points you could earn, simply adjust the “Your monthly spend” slider to align to your eligible monthly spend amount, and let our points calculator do the rest. Some cards exclude certain categories of spend such as BPAY payments, so it is wise to check the banks product page before applying to confirm that the spend you are relying on is included. It is always best to work within your current spending habits, or apply for a card before planned large purchases, so you can avoid spending beyond your means.

Remember, the point of getting a rewards card is to maximise your everyday spending. If you have to stretch your budget and buy things you don’t need in order to meet bonus point spend targets, you might want to consider a rewards card with lower spending requirements.

4. Are there any exclusions to eligible spend that I need to be aware of?

Spending requirements sometimes exclude or limit earning on certain categories, such as BPAY or payments to government entities. Always check the terms and conditions of the card on the bank’s site before applying.

5. What extra credit card features am I looking for?

Some credit cards come with special features such as purchase protection, travel insurance or concierge services. If these are important to you, you can select these in the search filters above. Note that if you do, any cards that don’t have these features won’t be displayed and you might miss out other great offers, so filter wisely.

6. Is it worth keeping the card after the bonus points period?

While you may earn a high amount of bonus points during the initial promotion period, some cards will drop the value of the points earned per dollar spend in the subsequent months. Click ‘more info’ or compare cards to view a graph of the earn rate over time. Even if maths wasn’t your favourite subject at school, the graphs make it really easy to see the best earning periods for your card.

7. Which fees and rates are relevant to me?

This depends entirely on your personal situation and the way you use your credit card. If you always pay off your balance in full, then the interest rates may not be something you place high value on. Plan to shop internationally? International fees may be a key consideration to keep in mind. Counting on secondary card holders helping you meet the bonus targets? Make sure to check whether additional cardholders are complimentary or have a fee attached.

8. Do I meet the eligibility requirements?

In addition to the minimum age requirement, some credit cards also have income or residential status requirements. After shortlisting your top credit cards, check to ensure you also meet the eligibility requirements. Other things to look for are the minimum credit limit, which can be higher for premium cards to encourage a higher level of spending and usually require higher incomes and less personal debt.

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