Frequent flyer points can snowball with clever credit card moves

Want to sharpen your skills at getting something for nothing? Learn how to maximise reward points offered by credit cards and airlines. Here’s how.

Savvy credit card holders are multiplying their savings and rewards by collecting frequent flyer points to pay for flights, accommodation and much more.

As a rush of new-year bonus deals emerge for new rewards credit card sign-ups, points specialists say consumers should look beyond promotions to work out if a card suits them.

Not all merchants accept them, but American Express rewards cards are a vital tool for maximising points, they say.

However, anyone using card spending to earn points should follow one key rule: avoid interest charges by paying off the balance every month.

“Interest charges almost always outweigh any frequent flyer benefits,” says The Champagne Mile founder Adele Eliseo.

“Ensure you pay off your card in full each month to avoid these charges,” she says.

Eliseo says people should be aware of points earning caps.

“Many cards place a threshold on the number of points that can be earned each month or each year, effectively throttling the points earn potential,” she says.

“The exception to this is American Express, which offers a number of products with uncapped earning potential, holding appeal for high monthly spenders.”

MORE REWARDS

American Express director of product and portfolio management Nicola Tan says more reward points were redeemed last year as travel rebounded.

People are using them to pay for flights, accommodation, travel perks and even to pay down card balances, she says.

“Make sure you choose a card that’s right for you and ensure you’re maximising its benefits,” Tan says.

Steve Hui from iflyflat.com.au says don’t be seduced by sign-up bonuses. Picture: Tim Hunter

“Look at details like whether there are limits to the number of points you can earn, expiry dates, program partners and any other special conditions.

Tan says people can compare products and find out more details on websites including finder.com.au, thechampagenemile.com.au and iFLYflat.com.au.

Other websites offering helpful information include pointhacks.com.au and canstar.com.au.

The founder and CEO of iFLYflat.com.au, Steve Hui, says don’t be seduced into signing up for a reward credit card just for bonus points.

“Some cards’ earn rates are bad,” he says.

“Most people focus on the sign-up bonus but then some cards earn points at a really low rate.

“And some cards have point caps where after a certain dollar amount per month you earn no points, or a stepped cap where you start earning less points.”

“There is no one card that fits everyone.”

TWO CARDS

Hui suggests a two-card strategy for collecting points.

“Everyone should always carry an Amex card and a Visa or MasterCard,” he says.

Even though people will find retailers and merchants that do not accept Amex, it is still worthwhile holding, Hui says.

“Amex cards can earn points at double the rate of a Visa or MasterCard,” he says.

For example, while several credit cards deliver just 0.5 frequent flyer points for every dollar spent, the typical rate for Amex cards is 1.25 points per dollar and up to 2.25 points per dollar spent on airline-related products.

“Both the Qantas and Virgin websites list all the cards that they partner with,” Hui says.

Adele Eliseo from The Champagne Mile

Nicola Tan from American Express.

He suggests people find more ways to earn points, and value their points. For example, spending 20,000 points for a $100 gift card delivers much less value than 16,000 points for a return economy flight between Sydney and Melbourne.

Eliseo says January can be a good time to research a new rewards credit card.

Her top picks include the American Express Velocity Platinum card, offering 100,000 bonus points for sign-ups through selected partners by February 6 and spending of $3000 within three months.

“Beyond the bonus points, this card offers a rare benefit – a complimentary return domestic Virgin Australia flight each year, in addition to four lounge passes. Using the flight can help to cancel out the $375 annual card fee.”

Eliseo also likes the American Express Qantas Ultimate card, currently offering 100,000 bonus Qantas Points for new cardholders who apply online by April 2, 2024, and spend $3000 within three months.

“While the annual fee is $450, this is effectively offset by a $450 Qantas Travel Credit delivered each year, along with four lounge passes,” she says.

AVOID WASTING POINTS

• Know how many points you need to get somewhere, using online points calculators.

• Look beyond initial bonus offers and focus on ongoing points potential.

• Don’t redeem points impulsively for low-value rewards such as gift cards or goods.

• Know when points expire, and how to hold onto them.

Originally published as Frequent flyer points can snowball with clever credit card moves