Image by Free Photos via Pixabay
Over a third of Australian rewards card holders say their card is costing them – not rewarding them, according to a survey by ME Bank.
The survey of 1,000 Australian credit card holders found that 37% said their rewards card provided them with no value, and is actually costing them money to maintain.
As for the biggest dollar benefit received each year, the most common (20% of respondents) said it was “only up to $50”.
ME’s Credit Card Specialist Christopher Mark was surprised at the findings.
“It’s staggering to see over half of rewards card holders believe the dollar benefit they get from their card is less than $50 a year,” he said.
The study also highlighted the lack of transparency around reward card offerings and how people’s lack of understanding of them can contribute to the card costing them.
Over a third (36%) of rewards card holders said they didn’t know what the dollar value earned was on their rewards card – despite 37% saying they had a credit card purely to benefit from the rewards.
Mr Mark said banks need to do more to educate consumers.
“It’s a worrying sign when approximately one in three people don’t understand what value they’re actually getting from their rewards credit card,” he said.
“Banks need to do a better job at offering products that are simple, fair and transparent to their customers.”
The report also looked at declining dollar value of rewards in response to regulation changes in recent years. The research found a number of rewards card providers have passed on rising costs to the consumer by reducing the value of rewards.
And it’s being felt by the consumer, with over 50% of rewards card holders surveyed saying they think the dollar value of their card has diminished since first taking out the card.
Mr Mark said consumers need to ask themselves whether a rewards card is right for them.
“Rewards on credit cards can be appealing, but be aware that you usually pay for them in some way – either through a fee or a higher interest rate,” he said.
“The key take away is to understand what you are up for and if you are having trouble managing debt, you might question whether a rewards card is the right option for you.”