The top frequent-flyer credit cards that could save your travel plans

How unfortunate that just as we are able to travel, all of a sudden, we can less afford to. As the coronavirus crisis is fading, interest rates are now starting to bite.

But there is something that could save your trashed travel plans: frequent-flyer points.

However, don’t just think about those that have been lying there dormant, but those you can earn for ‘free’.

There is something that could save your trashed travel plans: frequent-flyer points.Credit:Jim Rice

As providers fiercely compete for business, multiple frequent-flyer rewards cards are offering sky-high points to convert new customers.

We asked data house Canstar to interrogate the market for the most generous of these, looking first purely at opening bonus points (Canstar only looked at Qantas’ frequent flyer points as its cards give more of these points compared to Virgin).

In first place is ANZ’s Frequent Flyer Black card. It is not cheap – the annual fee is $425 and the interest rate, if you are silly enough to carry over a balance and therefore incur that interest, is 20.24 per cent. But there are 100,000 bonus Qantas points on offer plus an extra 30,000 points if you keep the card open for longer than 12 months.

You can do almost as well with three other cards, though. NAB’s Qantas Rewards Signature Card is a little cheaper at $395 annually ($295 in the first year) and 19.99 per cent. On offer upfront are 90,000 bonus points and, again, an additional 30,000 after a year.

Ditto for Westpac’s Altitude Black – Qantas Option card. The cost is $300 a year and the interest rate is an identical 19.99 per cent.

The Amplify Signature – Qantas Option card, from St George Bank, Bank of Melbourne and Bank SA, carries 90,000 upfront points. Its annual fee is $279 and its rate is 19.49 per cent.

Then rounding off the top five is the American Express Qantas Ultimate Card. You get 75,000 bonus points for an annual fee of $450 and an interest rate of 20.74 per cent.

But note that, like frequent-flyer schemes themselves, there is a lot to the fine print of frequent-flyer cards. For example, the American Express Qantas Ultimate Card includes $450 worth of Qantas Travel Credits a year, which cancels out the annual fee entirely.

All bonus points are also usually predicated on a particular spend within a certain time frame.

Of course, your choice should not come down to up-front incentives. Most frequent-flyer cards are elaborate offerings so make sure you are happy it is the real best deal.

To help identify this, Canstar has developed a net reward return calculation, which determined that the American Express Qantas Ultimate Card comes first. This is despite its high annual fee and interest rate – a great demonstration of why it can be difficult to choose these cards at first glance.

As providers fiercely compete for business, multiple frequent flyer rewards cards are offering sky-high points to convert new customers.Credit:Peter Braig

The dollar value of the Amex card’s rewards and free extras, minus the potential interest and fees over 12 months, nets a model user $667.69. This is almost $60 higher than its nearest competitor.

However, its two closest contenders are also both AMEX cards. In second place is the Velocity Platinum Card with a net reward return of $608.24, followed by the Explorer Credit Card, with a net return of $555.60.

The other interesting thing about these three cards is that each has a comparatively low minimum credit limit for a rewards card: $3000.

Jumping up to a $6000 minimum credit limit, we have the next-highest net return: $500.76 from ANZ’s Rewards Travel Adventures Card. Its annual fee doesn’t set you back much either at only $120.

Next-best on a value basis is HSBC’s Premier World MasterCard – Qantas Option. The net rewards are $492.56 but you have to be prepared to take on a $10,000 credit limit (remember access to credit is loan-limiting nowadays).

Rounding out Canstar’s picks is the Commonwealth Bank’s Ultimate Awards – Rewards Option with a net reward return of $487.53.

Again, you have to fork out a steep $420 for the annual fee, although the minimum credit limit is only $6000.

The ultimate savvy strategy, if you have a home loan, is to sit your salary in an offset account alongside that loan and use a high-point-paying frequent-flyer credit card for all your expenses.

You only shift the money out of your offset account and onto the card when your monthly bill is due, using the bank’s money to save lots of loan interest and snare you the odd cheap holiday too.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me. Follow Nicole on Facebook, Twitter or Instagram.

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