6 frequent flyer card pitfalls you need to know about

Last updated on November 25th, 2021
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Not all frequent flyer programs are created equal, and it is always best to compare to sort your way through to the one that will offer you the best value for money to help your travelling experience become a bit more comfortable. Frequent flyer cards can give you access to the best deals in town, but if you do not take this with a bit of salt you might find yourself coughing up more than you should. These are the six frequent flyer card pitfalls that you should be aware of.

1. Not weighing the cost against value

9 out of 10 Australians are part of a loyalty program, which 50% is made up of frequent flyer programes, which is a clear sign that we are a nation that loves travelling but we also loving saving wherever we can. If you are still fresh on the market for a frequent flyer card you might be amazed at the incredible offers that are available.

But if you fail to check the ongoing costs of a card it can cost you more than what it offers you. Some cards require that you spend big in order to win big and if you are not a big spender it can cost you hundreds of dollars to maintain. This could push you into the red. If the cost outweighs the value, you are getting then it is best to part ways with your card.

2. Be aware of the annual fee on the card

Most frequent flyer products will come with an annual fee which can either make or break your budget. The average annual fee can range from $208 – $700. Without taking into consideration the amount that you will pay an annual fee is also something that can result in you missing on payments or even exceeding your budget for something that does not add value. It is important that you constantly compare annual interest rate. This alone can save you hundreds of dollars.

3. Restrictions on where you can use points

Taking out a credit card that is affiliated with an airline generally means that you can only utilise those points on that frequent flyer program that is partnered with your credit card. Some frequent flyer programs will penalise you with a higher fee for your next flight if you happened to use their points on another airline that is not affiliated with them. However, there is a silver lining when it comes to airlines that have alliances with other airlines, making it easier to convert your points to use with another flight.

4. Reward value can increase or decrease over time

Reward programs are constantly shifting to provide customers with a better service, but sometimes they can lose value by increasing. This is known as award price increases, which means that the airline or rewards programme increases the number of miles or points that are needed to book a free flight or a free room.

This increase then devalues the points you have accumulated which can turn anyone’s mood sour especially if you were about to hit points that were going to book you a free flight to your desired destination. According to Mozo, reward cards have been plummeting by $27 in value p.a. which was a 63% drop from the previous year. This is when you need to weigh your options to see if the card is still worth it.

5. Point caps that can rain on your parade

It is important to factor in the fact that some frequent flyer credit cards limit the number of points you can earn per month. You will know if a card has a points cap if it offers 1 point per $1 spent but will have a limit of 50,000 points in a year. Which means no matter how much you spend on your card you will still earn 50,000 points.

6. Passing the ‘best before’ date

Reading the terms of your frequent flyer credit card are vital to make sure that you cash in when it matters the most. There are some frequent flyer reward programmes that have an expiration date on their points. This means that if you don’t use them up until a certain date the points will become void.

You cannot retrieve your points once they have expired. You will have to keep an update on the expiration date before you become extremely disappointed when it is time to retrieve them.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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