Credit card not worth the pain

CREDIT card providers must improve their rewards programs or face a significant decline in consumers spending on their plastic, a new report shows.

CREDIT card providers must improve their rewards programs or face a significant decline in consumer spending on plastic, a new report shows.

The 2016 Australia Credit Card Satisfaction Study released by research house JD Power found many customers consider their card rewards program unattractive with one in five saying the value of their rewards scheme has fallen in the past year.

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Many credit card customers say they are not happy with the rewards they are getting on their cards.

The survey quizzed nearly 4000 credit card customers and found half do not recall a single benefit that comes with their card.

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Crown Money Management’s head money coach Scott Parry says rewards cards have changed dramatically in the last few decades, giving customers less value for spending up.

“Back when Ansett was around credit cards programs had pretty good deals, you would get a dollar back for (every) dollar you spend but now you have to spend tens of thousands of dollars just to get a kettle’’ he says.

“It is not worth it. Our research shows you are spending 14 per cent more when you are using credit as opposed to cash.”

There are plenty of rewards credit cards available but Rising Tide Financial Services’ managing director Chris Browne says only a few users come out on top when using this type of plastic.

Rising Tide Financial Services’ managing director Chris Browne said credit card rewards are used as a marketing tool.

“The only people who benefit from rewards programs are big-spending business owners where they are putting $60,000 a year on their credit card,’’ he says.

Instead he suggests focusing on interest-free periods, interest rates and annual fees.

Parry also warns that customers signing up to any plastic deal should always read the terms and conditions, particularly on balance-transfer deals where you transfer one card debt to another.

The research found about three in four cardholders don’t understand the credit card terms on their cards, including foreign currency and transaction fees (30 per cent), interest rates (22 per cent) and balance-transfer conditions (20 per cent.)

@sophieelsworth