Make most of rewards

Uncovers the redeeming features of loyalty points

Anthony Keane

REWARD points programs are being weakened again, but millions of Australians are still using them to get something for nothing.

The announcement by American Express this month to shave the value of points earned in its popular card programs is the latest hit on consumers who chase free flights and other rewards.

While Amex cards remain more generous than bank offerings, reward program specialists say it’s important to maximise points potential.

Research has found that using credit card reward points for free flights delivers twice as much value as using them for gift cards or other retail items.

Independent platform Pointhacks. com. au’s spokesman, Daniel Sciberras, said many people believed they needed to spend large amounts to earn free flights.

“However, people are missing out on earning points simply because they forget, or are not aware, of the pointearning tools and avenues at their disposal,” he said.

Strategies included taking advantage of bonus offers, keeping frequent flyer accounts active, and maximising airline project partnerships, he said.

New research by comparison website Finder. com. au has found that 5.6 million Australians – about 44 per cent of credit card holders – plan to earn points from Christmas shopping.

Finder spokeswoman Bessie Hassan said card providers were rolling out sweeteners such as bonus points and annual fee waivers, but consumers should remember that reward cards had higher fees and interest rates.

The research found that 17 per cent of consumers had rewards credit cards but did not plan to use them.

“If you use credit cards to cover the cost of Christmas purchases, and clear your credit card balance in full every month, it could make sense to use a reward card,” Ms Hassan said. However, if the debt is not repaid in full each month, interest costs outweigh the benefit of points collected.

Separate Mozo. com. au data shows the average net value of an American Express rewards card will drop 27 per cent when its changes happen next April.

Amex cardholders will have to spend at least $ 7017 to earn a free one- way flight between capital cities, or $ 13,264 for a $ 100 gift card.

American Express said increased regulation had “changed the economics of the payments ecosystem across Australia” and had prompted it to drop its maximum frequent flyer points earning potential from 1.5 to 1.25 points per dollar spent.

Its head of airline co- brand partnerships and loyalty, Will Thorne, said other Amex features such as uncapped points earning, travel credits, airport lounge passes and insurance were not changing.