Noteworthy credit card offers: how to read them

Most frequent flyer points earned in Australia never come from flying, and credit cards account for the bulk of those that arrive by other means. That makes the choice of card, and the timing of an application, one of the bigger levers available to anyone building a points balance for a particular trip.

Card issuers compete for new customers by offering a bonus when you take out a card and meet a spend requirement. Those offers move constantly — amounts change, closing dates come and go, and cards are withdrawn and relaunched. Rather than chase the numbers, this page explains how the offers are built, so that when you look at a current one you can see what you are actually being asked to do.

The shape of a sign-up offer

Nearly every bonus points offer in the Australian market is assembled from the same parts.

A spend requirement. The bonus is conditional on spending a set amount on eligible purchases within a defined window from approval — commonly the first three months, sometimes expressed as the first 90 days. If you would not reach that figure through normal spending, the offer is not really available to you, and manufacturing spend to reach it usually costs more than the points are worth.

A split structure. Many offers no longer pay the whole bonus at once. A first tranche lands after the initial spend requirement is met; a second arrives at a later milestone, such as keeping the account open for a set number of months, or meeting a further spend requirement around the card anniversary. The headline figure is the total of both parts, so read which portion arrives when before deciding whether the offer suits you.

An eligibility restriction. Bonus offers are generally for new cardholders only. In practice that usually means you must not have held the same card — and often not any similar card from the same issuer — within a recent window, commonly somewhere between 12 and 24 months. Issuer rules differ, and American Express applies its own recency rule across its Australian cards.

An expiry. Some offers run to a stated closing date, others are described as ongoing and simply change without notice.

Fees and ongoing costs. An annual fee applies to virtually every points-earning card, sometimes discounted in the first year and sometimes accompanied by a separate annual fee for participation in the airline rewards programme. These are ongoing costs against a one-off bonus, which is why a card that looks compelling in year one can look quite different in year three.

Where the points end up

Cards fall into a few families depending on what currency they earn and how flexibly it can be moved.

The distinction matters more than the headline number. A bank currency quoted as a large points figure may convert to an airline at a ratio of several bank points to one airline point, so two offers with very different headline totals can be worth much the same. Westpac's Altitude points, for example, transfer to Velocity Frequent Flyer, KrisFlyer or Asia Miles at a three-to-one ratio. Always convert to the currency you intend to spend before comparing.

Flexible programmes have a second advantage. Because Membership Rewards and the bank schemes let you choose a destination programme later, you are not committing a balance to one airline years before you know where an award seat will appear. Some bank programmes also offer automatic monthly conversion to a nominated airline, which removes the decision but also removes the flexibility.

The gift card alternative

Several bank rewards programmes allow points to be redeemed for eGift cards instead of airline points. This gives you a hard floor on the value of a bonus: if the award seat you wanted does not materialise, the points are still worth something predictable. It also gives you a sanity check. If the airline redemption you have in mind is worth less than the gift card alternative, the airline transfer is the wrong move.

Ongoing benefits are part of the calculation

A bonus is a one-off. The benefits attached to the card recur every year you hold it, and for frequent travellers they often matter more.

• Lounge access. Some cards include a set number of Qantas Club invitations or Qantas First lounge passes each year; others include Priority Pass membership with a number of complimentary visits.
• Travel insurance. Complimentary international travel insurance is common on premium cards, typically activated by paying for the trip on the card. Age limits and pre-existing condition exclusions apply, so the Product Disclosure Statement decides whether it is useful to you.
• Purchase protections. Purchase cover, extended warranty and transit accident cover appear on many cards.
• Hotel and travel programmes. Visa Luxury Hotels access on some Visa cards, and hotel booking benefits on premium Amex products.
• Airline extras. Co-branded cards may add bonus Status Credits, companion flight discounts or travel credits with the airline.
• Business features. Business cards commonly allow a large number of employee cards at no additional cost, consolidating company spend into one account.

Earn rates have structure, not just a number

The rate quoted on a card is rarely the rate you will earn across all of your spending. Three mechanisms commonly reduce it:

• Statement period tiers. A higher rate applies up to a spend threshold within each statement period, with a lower rate beyond it.
• Annual caps. Some cards cap points earned over a rolling twelve-month period, or step the everyday rate down once a points total is reached within a calendar year.
• Category exclusions. Government payments, including tax office transactions, usually earn at a reduced rate, and some spending categories earn nothing at all.

Work out roughly where your own spending sits relative to those thresholds before treating a headline earn rate as the rate you will actually receive.

A practical sequence

Decide the redemption first. The award seat you want determines the programme, and the programme determines which cards are relevant. Then check eligibility, because a recent card with the same issuer can disqualify you from a bonus regardless of everything else. Then confirm the spend requirement is achievable with spending you were going to do anyway. Only then compare the bonus figures, converted into the currency you will actually redeem. Finally, look at the annual cost and the ongoing benefits, because that is what determines whether the card earns its place in the second year.

Frequently asked questions

Do I have to be a new customer to get a bonus? In almost all cases, yes. Offers are directed at new cardholders, and holding the same or a similar card from that issuer within a recent period will usually disqualify you.

How long is the exclusion period? It varies by issuer, but a window of roughly 12 to 24 months is typical. The terms and conditions of the specific offer are the only reliable source.

Why do some offers pay the bonus in two parts? Because issuers want cardholders to stay. A second tranche tied to keeping the account open or to spend around the card anniversary makes the full bonus contingent on retaining the card into a second year, when the annual fee also falls due.

What is the difference between Qantas Points, Velocity Points and Membership Rewards points? Qantas Points are Qantas Frequent Flyer's currency, used for flights, upgrades, hotels and the Qantas Store. Velocity Points are Virgin Australia's equivalent. Membership Rewards is American Express's flexible currency, which can be transferred to a range of airline programmes including Qantas, Velocity and KrisFlyer.

Are bank rewards points worth the same as airline points? No. Bank currencies convert to airline programmes at a set ratio, often several bank points for one airline point, so a large bank points figure can be equivalent to a much smaller airline figure. Convert before comparing.

Can I take the bonus as something other than flights? Often, yes. Many bank programmes allow redemption for eGift cards, which gives a predictable cash-equivalent value and a useful benchmark against any airline redemption you are considering.

Do business cards work differently? The structure of the bonus is the same, but eligibility is tied to the business — typically a valid ABN, a revenue threshold and a director or controller as the applicant. Business cards also tend to include employee cards and cash flow features that personal cards do not.

How often do these offers change? Continuously. Amounts, spend requirements and closing dates are all revised regularly, and cards are withdrawn and reissued, so verify the current terms with the issuer before applying rather than relying on any summary.

This information is general in nature. It does not take your personal circumstances into account.