Are frequent flyer points really worth your swipe?

Published on November 30th, 2020
  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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If it is not the interest rate that attracts you to the card, then it could be the features that most credit cards have on offer. Frequent flyer point can be a major drawcard especially if you are one who likes to take to the sky. At the start of each year, you get credit card lenders boasting frequent flyer sign up points that range anything from 80,000 points to 150,000. But are they worth investing a new card for or swiping?

What are they?

It is a currency of the loyalty programme you belong to when you sign up for a travel rewards credit card. You can earn points through the use of your card that you can later redeem for an airfare, travel expenses, or a hotel stay.

The card usually earns you points through every dollar you spend either through flying or through every day expenses such as buying groceries and paying for petrol. There are terms that come with the card such as having a set term that you must spend a certain amount to access the points.

For example, an ANZ Frequent Flyer Black card might say that you will earn 75,000 bonus points if you spend $2,500 on a purchase, but it will have to be a purchase done within the first 3 months from the account opening. This could be converted into $7,500 you will have to spend in order to redeem the points.

Check the terms and conditions before you sign up

Some cards are also selective when it comes to what items in a shop can earn you points, so it is important that you always read the terms and conditions of accessing and using these points. The last thing you would want is to spend hundreds of dollars on items that don’t get you any points.

This is where you would have to weigh in whether the credit card is worth your investment. The minute you must adjust your budget to unlock the points then you should know that it’s best to not to invest in the card.

How much are they worth?

Your points can be converted to cash when you use them to travel on a flight or product. You will need each point to have a high cash value for it to be effective. It will also help you use fewer points when you make each purchase because they will be high in value.

To determine the dollar value of your point you will have to look at the number of points required to purchase on the Quantas website against the current Australian dollar. Let’s say you choose a program where the points don’t expire which could be beneficial to someone who doesn’t spend much right up to the big spender.

If you looking to cash in on a free domestic flight you will need at least 13,000 points if you are using Velocity and 16,000 points if you plan on using Qantas. You can use a points calculator to see how much your points are worth. The value of each point is at a $1 so that means you will have to spend at least $13,000 to retrieve your free flight points.

Is it worth it?

This all depends on what type of credit card user you are, and whether you have the travel bug deeply embedded in you. Each Frequent flyer point system differs depending on which card you sign up for, that’s why it is essential that you check the features and terms that come with the card before signing up. The frequent flyer point feature in your card will be useless if you not much of a traveller, or a big spender as you won’t be able to access the points.

If you have points stacked up know how to use them

If you have used your new card liberally and managed to rake up the points you will need to know how to maximise your frequent flyer points. Do:

  • Use your points for an upgrade which will yield the best cash exchange rate.
  • Shop for a cheaper flight. You can use your points for travel during peak times.
  • Stack up points rather than swopping them for goods at a rewards store.

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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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