Naturally, it makes sense to gravitate towards the kind of rewards that appeal to you when choosing the right card and rewards program. Aside from rewards appeal, factor in how much you spend on the card per year. A realistic total will give you added information about the value you can expect from some programs. For instance, Canstar rates rewards programs on three different spending levels per year – $12,000, $24,000 and $60,000.
For those who love travel, flight rewards are the ultimate. However, if you spend only $12,000 per year on your card, chasing airline points will be a frustrating task. You may find redeeming cash or discounts on everyday living items will give you better value.
The common theme here is to focus intently on what each card can offer YOU individually. By taking a careful inventory of your lifestyle and spending habits, you can select the card that will provide the most rewards for what you already do—which is the whole point. Avoid the common mindset of impulsively signing up for a card that “sounds good” and then trying to change your behaviour to benefit from it.
So what could you earn?
To see whether rewards are becoming more generous or harder to get, we looked at the time it takes to break even. That is, how many months spending does it take before the rewards return exceeds the annual fee.
For our 5-star-rated cards, you would need to spend an average of $5,374 to earn reward equivalent to the annual fee of the card – which would take you just under three months if you spend $2,000 per month. This is down slightly from $5,633 last year. That’s not too bad really. Remember though that the return quoted above is the average of our 5 star products. A 5 star product represents outstanding value for money a 4, 3, 2 or 1 star product may well produce significantly less bang for your buck.
The upshot is that if you’re serious about being rewarded you need to:
- Choose a card that represents outstanding value for money (that’s where our ratings and comparison service comes in) and,
- Commit to putting the bulk of your everyday spending through that rewards card.
If you aren’t sure about committing to a rewards card, and putting all your spending through it, you might seriously consider starting with a low fee card – just to make sure you don’t end up in the red after fees. After a few months, if your spending level justifies it, you can move on to find your just rewards.
And – if you check out our Credit Card Rewards Star Ratings report, you will even find some zero fee cards. Who wouldn’t want something for nothing?