Are credit card points worth the hassle?

ARE you still collecting points on your credit card for those movie tickets or a ‘free’ DVD player? Forget about it.

Generic photo of Australian credit cards. Pic. Supplied Pic. Supplied

IS THAT rewards credit card really worth it?

You may collect some freebie movie tickets every year or a DVD player every other year, but what about all those fees and extra interest points you’ve been paying?

Research by comparison site Mozo found that 34 per cent of reward credit cards offer more than $20 in net value once you factor in fees. Mozo found that some annual fees are as high as $749.

Mozo director Kirsty Lamont said: “On average, annual fees on rewards cards are almost four times higher than standard credit cards, $161 compared to $43, not to mention a 5 per cent higher interest rate on purchases.

“Unless you’re smart about it, you could be paying through the nose just to sit on a pile of points.”

Mozo looked at 119 rewards credit cards and considered rewards including flights, gift cards and cashback benefits. There were 34 cards which delivered a return of more than $100.

The average rewards credit card interest rate was 19.62 per cent, compared to 14.48 per cent for non-rewards credit cards.

Flight rewards were found to have generally a higher return based on spend and consumers should avoid redeeming things such as fragrances with points as these were found to have a poor redemption rate.

Cards with flight rewards were found to have the best value.

“Our researchers found the difference between the best and worst value cards out there was as much as $769 a year, based on the average annual spend of $17,000,” Ms Lamont said.

Mozo found the American Express Velocity Escape Card delivered the best return value at $296 a year, followed by NAB Velocity Rewards Premium Card at $293. The Qantas American Express Delivery card was third.

Mozo warned that consumers can make reward cards work for them through a number of ways:

-Beware of intro point offers because these cards are often uncompetitive in the long term.

-Don’t let the incitement of a reward dictate your spending behaviour.

-Check when your points expire and whether they’re capped.

-Find out which stores might give you bonus points.

-Always pay your balance in full, otherwise interest charges will eat up any rewards value you may accumulate.