Credit card customers ripped off by rewards schemes

CREDIT card customers hunting rewards points are having to splash out an average of $22,000 just to get a piddling $100 gift card. Are you getting ripped off?

EXCLUSIVE: Credit card customers hunting rewards points are having to splash out an average of $22,000 for a piddling $100 gift card.

The value of cards rewards has plummeted by 70 per cent in the past two years leaving many shoppers wasting their time and money chasing bonuses.

In some worst-case scenarios shoppers are having to splurge as much as $83,000 just to get a $100 gift card back, financial comparison website Mozo has revealed.

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In July last year interchange fees — the amounts charged between MasterCard and Visa and merchants — were limited, meaning lenders make far less money on customers transactions and needed to recoup costs elsewhere.

Consequently this meant they took a razor blade to their rewards given to customers for spending up.

Crown Money Management founder Scott Parry said consumers should steer clear of credit cards and go on a “cash diet.”

“If you do the maths and you have to spend $80,000 to get a toaster these days, the fact is you are going to be spending more than you normally would,” he said.

“The cards are financial quicksand, the rewards points aren’t there and you are just setting yourself up to fail.”

Many customers are getting ripped off by chasing credit card rewards points.

Mozo data also showed seven in 10 cardholders have not switched to a cheaper non-rewards card in the past year.

Mr Parry said shoppers should use a debit card — linked to their own money — rather than racking up credit debts.

Latest Reserve Bank of Australia statistics show shoppers owe more than $51.6 billion on credit cards and more than $32.6 billion is accruing interest.

And in many cases credit card interest rates are higher than 20 per cent.

Mozo’s spokeswoman Kirsty Lamont said many “cards offer pretty poor value for the average spender.”

“Credit card rewards customers really need to be questioning if their rewards card is still worth a place in their wallet,” she said.

“Check your statement for the annual fee that you last paid and see the interest you have been charged.”

Mozo data also found four in 10 Aussies have a rewards card in their wallet.

It also showed one in three rewards cards now charge an annual fee that exceeds the value of the annual rewards earned by the average spender.

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