How are frequent flyer credit cards different from other credit cards?

Frequent flyer credit cards are linked to an airline loyalty program. The two major programs in Australia are Qantas Frequent Flyer and Velocity Frequent Flyer. When you make purchases with a frequent flyer credit card, you can earn loyalty points (generally 1 point for every $1), which you can then redeem for various things like flights and accommodation.

All of this may sound great, but you should be wary of the setbacks of frequent flyer credit cards:

  • High annual fee: Most frequent flyer credit cards have a higher annual fee than regular credit cards. You can expect to be paying an annual fee of up to $450.
  • High-interest rates: The average frequent flyer credit card interest rate is between 19%-22% with interest-free periods ranging from 30-45 days. Ideally, cardholders should be paying off their balance in the interest-free period each month to avoid the high-interest rate.
  • Bonus points spend requirements: A lot of frequent flyer credit cards offer bonus points when you first sign up. The requirements are generally to spend a specific amount in a specific period to be eligible to claim the bonus points (such as $3,000 in the first 90 days). Ensure that you can pay off these expenses in full before splurging to reach the spending requirement.

Which card do I go with?

Getting your first frequent flyer credit card can be overwhelming when there are so many options available. Here are a few things to consider that can assist you in choosing the best card for you:

Bonus points when you sign up

Getting more bonus points means more points to redeem on offers and benefits. However, keep in mind that higher bonus points generally equate to a higher spend requirement, so ensure that you choose a bonus scheme that you can afford paying off.

One of the top bonus points frequent flyer credit cards is the ANZ Frequent Flyer Black, which offers 120,000 bonus points when you spend $7,500 in the first 3 months.

Reward Points per $1 spent

A higher reward point ratio is crucial to your point earnings, especially if you are religiously purchasing with your frequent flyer credit card. A card that offers 0.5 points per $1 will require double the amount of spending compared to a card that offers 1 point per $1.

Two frequent flyer credit cards that currently offer 1.25 points for every $1 spent is the Qantas American Express Ultimate Card and the American Express Velocity Platinum Card.

Annual fee

Annual fees for frequent flyer credit cards can be costly. Although there may be some cards that have little or no annual fee, the benefits and rewards of these cards are most likely not as extensive as those with a higher fee.

One of the lowest annual fee frequent flyer credit cards is the American Express Velocity Escape Card which offers a life-long $0 annual fee.

Additional benefits/offers

It can also be useful to take note of any additional benefits or offers that some frequent flyer credit cards offer. Some of these benefits can include travel credit, airline lounge invitations, travel insurance, discounted first year annual fees, and more.

Check for points tiers and caps

Some frequent flyer credit cards can cap your limit on reward points able to be earned. An example of this is the HSBC Platinum Qantas Credit Card which has a cap of 7,500 points. If you are planning to spend a large amount of money monthly, it may be best to choose a card that is uncapped.

Income and credit history

Like other credit card applications, your income and credit history will impact your eligibility to apply for frequent flyer credit cards. The minimum gross income varies from card to card, so ensure that you meet the income criteria for the card you’re applying for. Having a bad credit history can impact your ability to pass the application for a card. Creating an account with a credit information website such as Credit Simple allows you to view your current credit score and obtain your credit report, which you can then use to try to improve your score.

Other ways to earn points

Earning points through purchasing with your frequent flyer credit card is only one of the many ways you can earn points. Listed below are some other common ways to earn points.

  • Flights: You can earn frequent flyer points when booking a flight through various airlines. The number of points you receive depends on your membership status as well as the fare class of your ticket. Make sure to check which partner airlines are eligible with your rewards program.
  • Accommodation: Booking accommodation through partnered hotels is also another way to earn points. Qantas makes this extremely easy through their online hotel booking platform.
  • Woolworths Rewards: Qantas also allows cardholders to set their Woolworths Rewards card to Qantas points. This makes it easier for cardholders to earn extra points on groceries, liquor and fuel at participating retailers.
  • Online Shopping: Both Qantas and Velocity have a vast range of outlets and retailers where you can earn points back from shopping online

Redeeming your points

There are several things you can redeem your points for.

Description Qantas FF Velocity FF
Flights Redeem your points for flights to various domestic and international destinations x x
Upgrade seats Upgrade to better seats on your trips with your points x x
Rewards store Redeem your points for products ranging from electronics and home appliances to fashion and beauty items x x
Hotels Enjoy discounted prices and book accommodation at partnering hotels from over the world x x
Car hire Rent a car using your points from selected car hire dealerships x x
Insurance Purchase health or travel insurance x
Fuel Pay for fuel and in-store purchases with your points x