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Frequent Flyer Credit Cards

Written by

Shaun McGowan

A frequent flyer credit card is a type of credit card that allows the cardholder to earn points for making purchases of a certain value. Cardholders need to be a member of an airline’s reward program, and points may be redeemed for a variety of rewards.

How do frequent flyer credit cards work?

Frequent flyer cards reward spending with points, usually matched to a certain spending amount. For example, you may find a card which offers 1 point per $1 spent. When you make a payment with your card, you earn points which can then be redeemed as part of your relative frequent flyer program:

  • You can redeem points for flights through an airline’s online booking system.
  • You can redeem points for other goods by logging into your frequent flyer account online and choosing merchandise or gifts from the relative airline’s online store.

When considering how to use your points, check to see whether you’ll benefit more from purchasing a ticket, or purchasing an upgrade. You may get a better deal using your points for flight upgrades than for booking a trip.

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If you are redeeming your points for gifts, check the dollar value of the gift first. You may find it better to save your points for a significant reward and to purchase the gift outright instead.

As with many other credit cards, frequent flyer cards will often include a number of other perks which may directly benefit frequent travellers, including:

  • Anti-fraud protection
  • Car rental insurance
  • Flight inconvenience insurance
  • Overseas travel and medical insurance
  • Discounted international transaction fees
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The available features and perks will vary between card issuers, so check to see which necessary perks are included when comparing frequent flyer credit cards.

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 rating
  • Not bankrupt
  • A member of a relevant frequent flyer program e.g Qantas Frequent Flyer or Virgin Velocity Flyer.
Frequent flyer credit card

Some card issuers may also have specific eligibility requirements you will need to meet, such as:

  • Having an existing account with the lender (such as a bank account)
  • Minimum income (varies between lenders)

Qualifying criteria will vary between lenders and cards, so it’s important to compare credit cards before applying to ensure you are eligible.

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You may be charged a fee to join a frequent flyer program. However, many airlines will allow you to join for free if you sign up online.

How to apply for a frequent flyer credit card

You can apply for a frequent flyer credit card online, over the phone, or at your bank. It’s important that you compare various offers before applying, both to find the right card for your circumstances, and to avoid unnecessary credit applications.

When applying, you will need to provide the card issuer with supporting documentation so they can assess your application and ability to meet repayments, which may include:

  • Personal details
  • Valid identification - such as a driver licence or passport
  • Employment details - including your employment status, employer contact details, salary information, and payslips to verify your income.
  • Your tax file number
  • Details of your assets - such as your home and motor vehicle
  • Details of your current expenses and other loans you may have

If you are self-employed, you will need to provide previous tax assessments instead of payslips. You may also need to provide information about your accountant.

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Airlines with frequent flyer credit card rewards

  • Qantas
  • Jetstar
  • Virgin Australia
  • Tigerair
  • American Airlines
  • Air New Zealand
  • British Airways
  • Cathay Pacific
  • Emirates
  • Etihad Airways
  • LATAM Airlines
  • Malaysia Airlines
  • Qatar Airways
  • Singapore Airlines
  • United Airlines
  • Avianca

How to choose a frequent flyer credit card

Choosing a frequent flyer credit card can offer many benefits in the right circumstances. How you plan to use your card will help determine whether a frequent flyer card is suitable for your personal situation. Things to consider when choosing a frequent flyer credit card include:

  • Your income and spending habits - How much you earn each year will affect how much you are able to spend on your card, and the value of the rewards you may receive in comparison to the card’s fees.
  • Balance transfer - Some frequent flyer cards will include a balance transfer offer. However, keep in mind that any new purchases made on the card will need to be repaid alongside your transfer amount.
  • How often you travel - Some frequent flyer cards are designed to reward frequent travellers, with certain perks and features included for regular travel overseas.
  • Annual fees - Annual fees are an important factor when choosing a card. If your frequent flyer card includes perks are of less value than the fees you are paying, you may wish to consider another card.
  • Points eligibility - Some cards may offer more points for purchases made for specific items, while some bills or purchases may not be eligible for points at all.
  • Point caps - Some cards include a cap for earning points on purchases - e.g. You may earn 1 point for every dollar spent up to $10,000, and 0.5 points for every dollar spent beyond that.
  • Redemption eligibility - How you can use your points will vary, depending on which frequent flyer program you are signed up with. Make sure you understand the rules for booking trips or seats using your frequent flyer points.
  • Bonus sign-up points - Many frequent flyer cards will offer bonus point incentives, where you will receive a large number of points for making a purchase of a certain amount within a specific timeframe - e.g. 120,000 bonus points for spending $4,000 in the first three months of receiving your card.
Frequent flyer points
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Make payments on time. If you want to see real value on your rewards, you need to avoid paying out interest on your balance by always paying your credit card bill in full and on time.

How much does a frequent flyer credit card cost?

Frequent flyer credit cards can be beneficial for the right person, however it’s important to weigh up the potential value of any rewards against the fees for using the card. The easiest way to determine whether a frequent flyer card may be suitable for you is to:

  • Calculate how much you spend each year
  • Calculate how many points you will earn
  • Calculate the associated value of these points
  • Compare the value of your points with the fees included with the card

Ideally, you want the value of your points earned to outweigh the cost of using the card. If you don’t think you will spend enough to balance the various fees you will need to pay, you may wish to consider a different type of credit card.

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Other frequent flyer credit card fees

Frequent flyer cards may include various fees. These can include:

  • Annual fee - Most credit cards have a yearly fee. Fees can range from $0 to $700 for various frequent flyer credit cards.
  • Foreign currency conversion fee - an additional charge for transactions made outside of Australia. This is crucial if you plan to use your card overseas, as the conversion fee may negate the benefits of any points you may earn.
  • Over the counter payment fee - charged when you pay your credit card bill in person, with fees starting at around $2.
  • Over limit fee - charged if your balance exceeds its limit.
  • Late payment fee - charged if you cannot make the minimum repayments on your owing balance.
  • Cash advance fee - charged when making a cash withdrawal, and usually at a higher rate of interest than the card’s purchase rate.
  • Dishonour of direct credit fee - charged if repayments are missed when paying through direct debit.
  • Replacement card fee - charged if the card is lost or damaged.
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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.

What is the maximum credit limit?

Frequent flyer credit cards have a minimum credit amount of $500, and a maximum credit limit of $100,000. The amount of credit that you can access from a lender is determined by your:

  • Income
  • Credit score
  • Overall financial health

The minimum and maximum limits for a frequent flyer card will vary between card issuers and cards. For example, a premium credit card may have a minimum limit of $15,000, while a basic frequent flyer card may have a limit of $3,000.

Frequent Flyer credit card minimum and maximum limits

Minimum LimitMaximum Limit

$500

$100,000

Summary

Frequent flyer credit cards allow cardholders to earn points on eligible purchases made with the card. These points can be redeemed for flights, upgrades, gifts, or other rewards, and each card will differ in both how points can be earned, and how they can be spent.

In summary, frequent flyer credit cards:

  • Reward spending with frequent flyer points
  • Require the cardholder to be a member of a frequent flyer program
  • Are only beneficial if you can make regular payments and avoid interest charges
  • Can include extra benefits such as travel insurance or rental car hire and insurance
  • May include certain restrictions on how points are earned or can be spent

Frequent flyer credit card FAQ

There are many different frequent flyer programs you can join online. The most important factor when choosing an airline is to understand their partner airlines, and how you can use your points. For example, Qantas Frequent Flyer points can be used with more than 30 airlines around the world.

You’ll usually receive an updated points balance from your purchase once a month. Most credit card partners transfer points on a regular day, so you should receive you updated balance at the same time every month.

Some purchases may be ineligible for earning points. The criteria for earning points on your frequent flyer card will be listed in the terms and conditions when applying. If you are unsure of whether your purchase will qualify, you can contact your card issuer.

You can redeem any points you’ve earned through the airline you are registered with. You can book flights through an airline’s online booking system, or make purchases from the airline’s merchandise and gift shop online.

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About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.