How do frequent flyer credit cards work?
A frequent flyer credit card allows the cardholder to earn points on eligible purchases and redeem them with the airline frequent flyer program linked to the card.
They’re essentially a rewards credit card but with perks tailored to cardholders who travel frequently.
Cardholders need to be a member of an airline’s reward program, and points can be redeemed for a variety of rewards. Not just travel-related ones.
How to boost your frequent flyer points:
Consider frequent flyer cards with bonus sign up points
This gives you an upfront injection on frequent flyer points. With bonus points, there are almost always conditions attached. This usually involves needing to spend a minimum amount in the first few months.
Look for cards with high point earn rates
Pay attention to how many frequent flyer points you’ll earn per $1 you spend. Just as importantly, check what purchases you earn points on and at what rate. Some transactions won’t earn you any points, while others will be eligible for a lower earn rate.
Match your card to your travel & spending habits
You may earn more points on spending with the airline your frequent flyer card is linked to. So it makes sense to choose a card that will maximise your current spending if you regularly fly with a particular carrier. Some cards also offer more points on international spending.
Avoid costly interest charges and fees
Something you almost certainly won’t earn frequent flyer points on is interest charges. The same goes for card fees. Minimise these costs wherever possible, otherwise any value you get from frequent flyer points disappear very quickly.
What can I redeem frequent flyer credit card points for?
Most airline frequent flyer programs partner with other product and service providers, meaning you can redeem your frequent flyer points for more or less anything.
That said, it’s often the case that frequent flyer points go further when used on flights or upgrades.
Here are some of the more common perks you can use your frequent flyer points on:
- Flight bookings and upgrades
- Hotels and other accommodation
- Car rental
- Shopping and gift cards
- Restaurants, food and wine
- Insurance premiums
- Fuel and other car expenses
Other benefits of frequent flyer credit cards
As with many other credit cards, frequent flyer cards and other credit cards for travellers will often include a number of other perks which may directly benefit frequent travellers, including:
- Airport lounge access (e.g. two passes per year)
- Complimentary travel insurance
- Car rental insurance
- Flight inconvenience insurance
- Travel vouchers
- Discounts with partner travel providers (e.g. hotels and car hire companies)
- Discounted international transaction fees
The features and perks will vary between card issuers, so check to see which perks are included when comparing frequent flyer credit cards.
Frequent flyer programs in Australia: Qantas vs Velocity
Qantas Frequent Flyer
Cost to join
- The standard joining fee is $99.50 AUD, buy there are a number of ways you can become a member without paying a separate joining fee (e.g. though eligible frequent flyer credit cards)
Ways to earn points
- Eligible purchase on a Qantas frequent flyer credit card
- Booking flights with Qantas, Jetstar or another partner airline
- Booking accommodation or car rental with a partner providers
- Taking out insurance through Qantas or a banking product (e.g. Qantas home loan)
- Shopping with a partner retailer
Notable partner brands
- Adairs, Apple, BP Rewards, Country Road, David Jones, Microsoft, Myer, Optus, Red Energy, The Iconic, Woolworths (everyday rewards).
Ways to redeem points
- Flights, accommodation, gift cards, shopping (more or less anything that earns you points can also be a way to redeem them)
Partner airlines include
- Air France, Air New Zealand, Air Tahiti Nui, Aircalin, Airlink, Airnorth, Alaska Airlines, American Airlines, Bangkok Airways, British Airways, Cathay Pacific, China Airlines, China Eastern, China Southern, EL AL Israel, Emirates, Fiji Airways, Finnair, IndiGo, Japan Airlines, Jetstar, KLM, Latam, Network Aviation, Skytrans, SriLankan Airlines, WestJet.
Do points expire?
- Yes, 18-months after your last eligible activity.
Can I transfer points?
- Yes, you can transfer a minimum of 1,500 Qantas points per transfer for free to an eligible family member who is also a Qantas Frequent Flyer member.
Velocity (Virgin)
Cost to join
- It’s free
Ways to earn points
- Eligible purchase on a Velocity frequent flyer credit card
- Booking flights with Virgin or another partner airline
- Booking accommodation or car rental with a partner providers
- Taking out a banking or insurance product through a partner provider (e.g. Medibank)
- Shopping with a partner retailer
Notable partner brands
- 7-Eleven, Apple, Chemist Warehouse, CommBank, Country Road, David Jones, Ebay, Flybuys, Myer, The Good Guys, The Iconic.
Ways to redeem points
- Flights, accommodation, gift cards, shopping (more or less anything that earns you points can also be a way to redeem them)
Partner airlines include
- Virgin Australia, United Airlines, Virgin Atlantic, Singapore Airlines, Air New Zealand, Etihad Airways, Hong Kong Airlines, Air Canada, Qatar Airways, Hainan Airlines, Hawaiian Airlines, FlyPelican, South African Airways, Tianjin Airlines, Capital Airlines, Link Airways, All Nippon AIrways, FlyPelican.,
Do points expire?
- Yes, after 24 months of account inactivity.
Can I transfer points?
- Yes, you can transfer between 5,000 and 125,00 points to an eligible family member (who is also a Velocity frequent flyer member) up to four times each year.
Expert frequent flyer credit card tip
Brad Kelly, Credit Card Expert
"For a frequent flyer card to be worth your while, you really need to watch the fees. Card fees have increased in the last couple of years across the board but particularly on premium frequent flyer cards. Several providers have also changed to a monthly fee model which can make an expensive card look cheaper than it is. For me, a frequent flyer card with a low annual or monthly fee and no international fees is the gold standard, but these are rare."
Brad Kelly, Credit Card Expert
How to choose the best frequent flyer credit card
There’s more to comparing frequent flyer credit cards than there is when shopping for low rate credit cards or among credit cards with no annual fee. Below are some of the other main factors you may want to take into account. Note the main factors vary slightly if you're shopping for a business credit card.
1. Interest rate and fees
This is a very good place to start. There’s not much point having a frequent flyer credit card packed with perks and features if they’re going to be cancelled out by high high interest rates (purchase rate and cash advance rate), and fees.
As a reference point, the latest credit card data shows the average interest rate is around 18.60% p.a. and the average annual fee is $135.
If you manage to find an interest-free credit card offering rewards or you’re confident you have the discipline to pay off the entire balance within the card’s interest-free days, the fees will likely be your main cost.
We’ll explain these in more detail later on. Spoiler alert, fees on some frequent flyer card fees can be very high and are only really worth it if you're raking in points and using all of the other benefits (like lounge passes).
2. Your income and spending habits
Some frequent flyer credit cards have a minimum annual income built into the eligibility criteria. Others will only be worth the high annual card fee if you are spending a lot.
If that’s the case, it’s important to factor in whether your income and other financial commitments mean you can comfortably support that level of spending.
If you think you'll need to spend more than you usually would to get the most from the credit card, seriously consider whether it's right for you.
3. How often you travel
This will come as no surprise, but frequent flyer credit cards generally offer more benefits and overall value to people who travel a lot.
Think credit cards with travel insurance, lounge passes, travel vouchers, hotel discounts.
If you’re not going to make the most of these perks, a different type of card may be a better fit.
4. Points, points, points
It’s tempting to just look at the amount of bonus points you get when you sign up and how many points you earn per dollar spent using the card.
These are certainly well worth considering, but you should also consider the fine print on your frequent flyer points:
- Is there a cap on how many points you can earn per year?
- Which purchases are eligible to earn points?
- What kind of spending won't earn you any points? (e.g. paying certain bills, gambling)
- Do the points expire?
- Where and how can you use them? Or can they be converted to cashback?
New Money.com.au research reveals Australians who redeemed frequent flyer points over the past year saved an average of $1,140 on travel and accommodation costs. The nationally representative survey found that a third of people (33%) who used frequent flyer points in the past 12 months saved more than $1,000 on travel expenses, including 14% who reported savings above $2,000 on flights and accommodation.
However, the majority of Aussie travellers (67%) saved under $1,000 through point redemptions.
Top credit cards for frequent flyer points
| Card | Points per $1 (everyday spend) | Card fee | Purchase rate |
|---|---|---|---|
| American Express Platinum Card | Up to 2.25 | $1,450 per year | - |
| American Express Explorer Credit Card | Up to 2 | $395 per year | 23.99% |
| American Express Velocity Platinum Card | Up to 1.25 | $440 per year | 23.99% |
| American Express Qantas Ultimate Card | Up to 1.25 | $450 per year | 23.99% |
| Qantas Money Titanium Credit Card | Up to 1.25 | $1,200 per year | 20.99% |
| American Express Velocity Escape Plus Card | Up to 1 | $95 per year | 23.99% |
| Qudos Bank Visa Platinum Credit Card | Up to 1 | $189 per year | 4.99% for 5 months then 18.99% |
| NAB Rewards Platinum Credit Card with Velocity | Up to 1 | $195 per year | 20.99% |
| American Express Qantas Premium Card | Up to 1 | $249 per year | 23.99% |
| G&C Mutual Bank Platinum Credit Card | Up to 1 | $299 per year | 19.99% |
10 ways to get the most from your frequent flyer credit card points
Take advantage of frequent flyer credit cards with bonus sign up offers (assuming the credit card is good value and a suitable match for you overall).
Look for cards with the highest point earn rates.
Understand which purchases will earn you the most points and which ones aren’t eligible.
Match the card to your spending habits. If you only travel occasionally, a general rewards card may be more suitable.
Use your card for everyday purchases to earn more points, but only if you can afford to repay the card balance in full every month.
Some frequent flyer programs allow you to earn bonus points by hitting non-financial targets, like walking a certain number of steps per day.
Pool points with family as both Qantas and Velocity allow point transfers between eligible family members.
Redeem your points wisely and look for the rewards perks that will get you the most bang for your points (but above all else, make sure you actually use them).
Share the card with your partner. Most credit cards allow additional cardholders. If two people are using the card, you'll likely earn more frequent flyer points (again watch for overspending).
Offer to pay for split expenses and have your friends, family or roommates etc. send you the money.
Frequent flyer credit card fees
The fees on your frequent flyer credit card will play a major part in dictating whether the card will cost you or save you money overall. Here are the main fees to consider:
- Annual fee (can range from $0 to $700 depending on the card)
- Foreign currency conversion fee, usually around 3% but there are credit cards with no international fees
- Over limit fee, charged if your balance exceeds its limit
- Late payment fee
- Cash advance fee, charged when making a cash withdrawal or buying foreign currency
- Replacement/additional card fee
- Balance transfer fee if you move the balance of an existing credit card to your frequent flyer card
Frequent Flyer cards tend to charge more in interest, so carrying a balance can become costly. Always clear your balance each month to avoid compounding interest.
Who can qualify for a frequent flyer credit card?
To qualify for a frequent flyer credit card you must meet the following qualifying criteria:
- Over 18 years of age
- Australian citizen or permanent resident
- Have a good credit score
- Minimum income (varies between lenders and cards)
- A member of a relevant frequent flyer program e.g. Qantas Frequent Flyer or Virgin Velocity Flyer.
Qualifying criteria will vary between lenders and cards. Make sure you’re eligible for the frequent flyer credit card you have your eye on before applying. A declined application could damage your credit score.
How to apply for a frequent flyer credit card
Valid ID
Such as a driver licence or passport
Employment details
Including your employment status, salary information, and payslips to verify your income
Details of your current expenses
Plus any other loans you may have
Details of your assets
Such as your home and motor vehicle
If you are self-employed, you will need to provide previous tax assessments instead of pay slips. You may also be asked for financial information provided by your accountant.
Is getting a frequent flyer credit card worth it?
Frequent flyer credit cards can be beneficial for the right person. But for you to get good value, you’ll need to make sure you find the best frequent flyer credit card for YOUR situation. You’ll also need to make the most of the perks being offered.
If you just need a credit card as a backup or for emergencies, a frequent flyer card will be an expensive way of going about it.
But if you are the type of person who travels a lot, likes to track points and work towards an indulgent treat every so often (while also having the discipline to pay off the balance of your credit card in full every month) a frequent flyer credit card could be worth considering.
One simple way to determine whether a frequent flyer credit card may be suitable for you is to:
- Calculate how much you spend each year
- Calculate how many points that will earn you
- Calculate the associated value of these points
- Compare the value of your points with the fees included with the card
