Customers to spend up to $80,000 to get credit card rewards points
Rewards points attached to new credit card deals can leave customers spending up to $84,000 to reap any benefits. FIND OUT THE BEST AND WORST DEALS
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Exclusive: Shoppers lured into signing up to credit card rewards schemes are having to spend up to $84,000 to receive free flights or gift cards, shocking new figures found.
Financial institutions have sharpened up their card sweeteners including bonus points ahead of Christmas to try and snare shoppers who will be splurging.
But analysis from financial services firm Mozo found Bankwest has one of the worst credit cards on the market – the More World Mastercard – requires users to spend a minimum of $84,000 on eligible purchases within 12 months to earn a bonus 115,000 points.
This spend is almost the average Australian wage at $84,968.
Spending $84,000 on this card would get the user an equivalent of one return domestic flight from Sydney to Melbourne or two $100 gift cards.
But Bankwest’s general manager of customer solutions and insights Paul Vivian said the card “compares favourably with similar rewards cards.”
Latest Reserve Bank of Australia figures shows the amount of debt on credit cards is a massive $49.7 billion and more than $29.2 billion is accruing interest.
In recent years providers have scaled back the value of rewards points, meaning customers have to spend more to reap the benefits.
Mozo’s spokeswoman Kirsty Lamont said rewards cards could be “extremely tempting” but there could be a “sting in the tail” if you don’t check the terms and conditions attached.
“We have seen the value of credit card rewards decline dramatically over the last few years,” she said.
“It’s really important not to just look at the introductory offer but the ongoing points earn rates and redemption rates to make sure it delivers good value over the long term.”
Financial adviser Scott Haywood said customers should assess credit card annual fees before signing up.
“Often these fees on bonus points rewards cards are very expensive,” he said.
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“Credit cards have interest rates usually above 20 per cent, it’s the most profitable form of credit for banks so people need to go back to basics and go back to debit if they can’t manage their personal budget.”
Some rewards cards charge annual fees of up to $1800 and interest of more than 20 per cent.
However if customers wanting a card hunt around they can get better rewards value, with up to 200,000 free bonus points on offer with the Bank of Melbourne, BankSA and St. George Amplify Signature card.
These deals require customers to spend $24,000 in the first 24 months which is equivalent to spending $1000 spend per month.
In return customers get six return domestic flights from Sydney to Melbourne or nine $100 gift cards.
One return flight from Sydney to Melbourne normally costs $350.