Credit Card research & insights

New research from Money.com.au reveals many Australians are turning to credit cards as a credit score hack — but for most, it’s largely a blind gamble.

The nationally representative survey found more than one in four Australians (28%) with a credit card signed up at least partly to improve their credit score. Among them, one in ten (10%) said it was the main reason they got a credit card, while 18% said it was a factor in their decision.

Credit score gamble: Half of cardholders unsure if it paid off

However, half of credit cardholders who got a credit card for this reason (50%) don’t actually know whether it improved their score. Just 21% of Australians said their credit score improved after getting a credit card, a quarter (25%) reported no change, while 4% said their credit score worsened.

Money.com.au’s Finance Expert, Sean Callery, says a credit card can either build or damage your credit profile and many people are taking a risk by not properly tracking the outcome.

“If you don’t actually know whether using a credit card is improving your credit score, that makes it something of a gamble, as it could backfire and do exactly the opposite of what you’re looking to achieve,” he says.

“To avoid any negative impact, you generally need to at least make your minimum repayments on time each month. Ideally, you should pay the balance in full by the due date to avoid interest altogether. With interest being charged on nearly half of the nation’s $43.34 billion in outstanding credit card debt, it’s clear many Aussies aren’t doing that.”

“Late or missed payments can quickly drag your credit score down and stay on your credit file for up to two years. But the impact of having a credit card goes beyond your credit score. If you’re planning to buy a home, lenders consider a percentage of your credit card limit as an ongoing monthly expense, which can reduce your borrowing power. The only way around that is to close the card altogether, or reduce your limit to the bare minimum you need to minimise the impact.”

The research found the majority of Australians (72%) didn’t consider the impact on their credit score when they applied for a credit card.

Young Aussies using credit cards to fast-track their credit profile

Gen Z are more than three times as likely as older Australians to take out a credit card to boost their credit score, with 26% saying it was their main reason for applying.

Millennials followed at 18%, compared to just 8% of Baby Boomers and Gen X combined.

“Younger Australians often have a thin or no credit file, so a credit card can feel like the simplest way to start building a repayment history. But it’s even more important to keep track of your credit score as you get closer to applying for major finance, like a home loan,” Sean says.

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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.

Money.com.au’s Finance Expert, Sean Callery, says frequent flyer points can make a real dent in the cost of travel.

“For most Australians, saving in the four figures through frequent flyer points is a decent return and can effectively cover the cost of an adult plane ticket or thereabouts. The aim is to extract more value from points than you’re paying in card fees,” he says.

“An average frequent flyer credit card in Australia costs around $300 a year in fees, so you need to be confident that you’re getting enough value from points and other benefits to justify the cost. Travel points usually do the heavy lifting here, but some of these cards also come with travel insurance and even airport lounge passes thrown in.”

“The biggest value tends to come from redeeming points on flights or cabin upgrades, where reward seats aren’t priced in line with cash fares. Points can unlock flights or upgrades that would otherwise cost far more in dollars.”

“Our research also shows a quarter of Australians are saving their frequent flyer points for future travel rather than redeeming them straight away. They may be holding out for long-haul trips, peak travel periods, or higher-value redemptions.”

Millennials and Gen X squeeze the most value from travel points

Millennials and Gen X emerged as the biggest winners, saving an average of $1,220 and $1,200 respectively over the year through frequent flyer point redemptions. Gen Z travellers saved $1,075 on average, while Baby Boomers recorded lower average savings of $980, despite typically holding larger points balances.

Flights still dominate, but points aren’t just for airfares

Flights remain the most common way Australians redeem their frequent flyer points, with half (50%) using points for airfares in the past year. Almost one in three Aussies (31%) used points for a mix of flights and accommodation, while a further 19% redeemed points for accommodation only.

The survey found that only 60% of Australians used frequent flyer or credit card points for travel in the past 12 months. The remaining 40% either didn't earn travel points or didn’t redeem any points during the period.

STATES:

We also have a state-by-state breakdown of how much Australians saved on travel by redeeming frequent flyer points, if that’s useful.

On average:

Queenslanders saved the most at $1,210 NSW: $1,200 WA: $1,150 Victoria: $1,110 South Australia: $1,000

Queenslanders likely saved the most because flights from the state are often longer. For example, flying from Brisbane to Bali can take six to seven hours, compared with around three to four hours from Perth, so you get greater savings when frequent flyer points are used.

With fewer rail alternatives and a heavier reliance on air travel for interstate and long-haul trips, using points in Queensland is more likely to replace an expensive flight, so the savings tend to stack up faster than on shorter, cheaper routes elsewhere.

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New research from Money.com.au reveals Australians will ditch or downgrade their credit cards in droves if rewards points are watered down, as the RBA still weighs reducing card payment costs.

The Reserve Bank is considering reforms to ban customer surcharges on card payments and reduce interchange fee caps. In response, credit card providers warned they may reduce the value of rewards programs or increase credit card fees to offset lost revenue.

The nationally representative survey found 18% of Australians with a credit card will cancel their card altogether if rewards are reduced, while 33% will switch to a lower-fee credit card.

Meanwhile, 30% said they will shift more of their spending to a debit card and only keep a credit card as a backup. One in ten Australians (10%) will turn to BNPL services instead of using a credit card.

Only 24% said they will stick with their current credit card because they still value the rewards, even if the perks are reduced.

Money.com.au’s Finance Expert, Sean Callery, says rewards points are a major driver of credit card use and cutting them could spark a wider spending shift.

“Credit cards offer a number of different perks, but our research shows that rewards points are the single biggest reason Australians take out and use a credit card. If those points lose their shine, a lot of people will ask themselves: what’s the point of paying an annual fee or risking interest charges just to get less value back? People won’t keep paying for perks that don’t stack up,” he says.

“And if Australians shift more everyday spending from credit to debit or BNPL, it could change spending habits across retail, travel and other sectors. Shoppers are already hyper price-sensitive due to rising living costs, so they may expect retailers to bridge the value gap through bigger discounts and loyalty perks. That would put even more pressure on businesses already operating on tight margins.”

Baby Boomers to stick with rewards, Gen Z turns to BNPL

The survey found that Baby Boomers were the most likely to say they will stick with their current credit card because they still value the rewards (27%), followed by Gen X (25%), Gen Z (23%) and Millennials (22%).

“Older Australians are more likely to have built up larger points balances over time, so there’s a stronger incentive to stick with rewards even if the earn rate is reduced,” says Sean.

Younger Australians were more likely to say they will turn to BNPL, with Gen Z (13%) and Millennials (12%) choosing this option, compared with 10% of Gen X and just 6% of Baby Boomers.

The RBA has extended the timeline for concluding its review, with a final decision due by March 2026. Any proposed changes may take effect from July 2026 or later.

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New research from Money.com.au reveals that nearly half of Australians with a credit card (49%) are ‘churners’ and admit to signing up for new cards only to collect bonus rewards points.

Among them, 30% say they’ve done it once or twice to boost their points balance, while 19% regularly sign up for new credit cards specifically to collect bonus rewards points.

The survey found those ‘churners’ have opened more than two credit cards on average in the past three years.

Credit card providers often offer sign-up bonus rewards ranging from 50,000 to 300,000 points to lure in new customers. These points can be redeemed for travel, gift cards or cashback on eligible purchases.

Money.com.au’s Finance Expert, Sean Callery, says the appeal of big sign-up bonuses is understandable, but consumers need to tread carefully.

“Taking advantage of credit card bonus sign-up offers might seem like a way to ‘hack the system’ and boost your points balance. But it can also become a trap if there’s a hefty annual fee, little value in the card’s ongoing rewards, or worse, a chance that it leads to problematic spending and debt. For instance, many bonus offers require the cardholder to meet a minimum spend threshold in order to qualify,” he says.

“Credit card providers have also tightened conditions to make it harder for churners to exploit these offers, so consumers need to pay close attention to the fine print. For instance, many offers now spread the bonus points across two years, meaning you’ll need to pay two years of annual fees before you receive the full benefit.”

“If you’re churning credit cards to rack up bonus sign-up points, make sure you’re still sticking to the basics. Pay your balance in full and on time each month to avoid interest, and review your fees at least once a year.”

“It’s also important to remember that every new credit card you open affects your credit score. Applying for multiple cards in a short period can raise red flags for lenders, particularly if you plan to take out a mortgage in the future.”

Meanwhile, 35% of Australians with a credit card have never signed up for plastic just for the bonus points, while 15% have a card that doesn’t offer rewards.

Younger Aussies lead the bonus points chase

The bonus points chase is most popular among younger Aussies, with 76% of Gen Z reporting they sign up for new cards solely to chase rewards, followed by 72% of Millennials. This compares with 51% of Gen X and just 27% of Baby Boomers.

More than half of Baby Boomers (54%) say they’ve never signed up for a credit card just to collect bonus rewards points, along with 35% of Gen X. By contrast, only 18% of Millennials and just 11% of Gen Z say the same.

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New research from Money.com.au reveals how much of Australia’s lifestyle spending is being charged to credit cards.

The nationally representative survey found that Australians put an average of $1,200 a month in discretionary spending on their credit cards — the equivalent of $14,400 a year. Discretionary spending includes non-essential expenses like dining out, entertainment, shopping and travel.

That means more than 40% of monthly credit card transactions are going toward non-essentials rather than bills or necessities, based on the average transaction value of $2,961 per active credit card account.

Money.com.au’s Finance Expert, Sean Callery, says many Australians underestimate how much of their credit card bill goes toward funding their lifestyle.

“If you think about it, that means roughly two in every five dollars charged to credit cards each month is going toward lifestyle spending rather than essential or emergency expenses. It’s striking given the ongoing cost-of-living pressures,” he says.

“The challenge is that discretionary spending changes from month to month, so it’s harder to keep track of than essentials like rent or bills. Before you know it, you’re paying over 20% interest, depending on the card, on last month’s little luxuries, and that’s how people can easily fall into a lifestyle debt trap.”

The research found that most credit cardholders (70%) avoid interest charges and pay off their full balance each month. The remaining 30% either carry a balance into the next month and incur interest, or only make the minimum repayment each month.

Gen X outspend other generations on lifestyle credit card spending

The survey found that Gen X put more lifestyle spending on their credit cards than any other generation, averaging $1,400 a month in non-essential purchases. Millennials follow at $1,200, then Baby Boomers at $1,160. Gen Z charge the least at $735 per month, likely due to lower incomes and credit limits.

However, younger Australians are more likely to carry a balance on their credit card or only make the minimum repayment each month. Millennials (37%), Gen X (36%), and Gen Z (35%) all report not paying off their full balance each month or making only minimum repayments, compared to just 20% of Baby Boomers.

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New research from Money.com.au reveals that 39% of Australians trust the travel insurance bundled with their credit card is sufficient to cover them in the event of mishaps or emergencies overseas.

By contrast, a quarter of Australians (25%) say credit card travel insurance doesn’t provide adequate coverage, while another 15% admit they don’t know if their credit card includes it.

Money.com.au’s Finance Expert, Sean Callery, says credit card travel insurance can be good value, but it’s important to understand both the benefits and limitations.

“Many people don’t realise that the travel insurance bundled with their credit card can offer very similar inclusions and claim limits to standalone policies, as they’re often underwritten by the same major insurers. For some, it can represent good value, since the cover comes at no extra cost beyond the annual card fee,” he says.

“But because the cover is standardised for all cardholders, it may not suit every trip. For example, most travel insurance on credit cards won’t cover adventure sports or allow you to adjust claim limits the way standalone policies do. It’s also worth noting that cover only kicks in if you book your trip using the credit card, so it’s important to check the eligibility requirements before relying on it.”

The survey found that 21% of Australians own a credit card that doesn’t include travel insurance.

Millennials trust credit card travel insurance the most — Gen Z the least

Millennials were the most likely generation to trust the travel insurance on their credit card (45%), followed by 42% of Gen X and 34% of Baby Boomers. Gen Z were the least likely to trust their card’s travel cover, at just 28%.

Meanwhile, 22% of Gen Z and 21% of Baby Boomers admitted they didn’t know whether their credit card includes travel insurance, compared with 13% of Gen X and just 8% of Millennials.

Is credit card travel insurance enough for your trip?

Credit card travel insurance can be enough if you’re after generic cover as it typically includes benefits for medical emergencies, trip cancellations, lost baggage and travel delays. However, because it’s a ‘group policy’, the cover is standardised for all cardholders, meaning there’s little room to tailor it if the inclusions don’t suit your trip.

A standalone policy is generally more suitable if you need higher claim limits for long or expensive trips, have pre-existing medical conditions, or plan to take part in adventure sports. In any case, it’s essential to read the Product Disclosure Statement (PDS) carefully so you know exactly what is and isn’t covered.

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New research from Money.com.au reveals that 59% of Australian travellers paid foreign transaction fees on their most recent overseas trip — costing them an average of $80 for using their card abroad.

The nationally representative survey found that of those travellers who paid foreign transaction fees, 32% were slugged with charges of $100 or more, while just 27% paid less than $50.

Foreign (or international) transaction fees are charges banks apply when you use your card overseas or make a purchase in a foreign currency. These fees typically range from 1% to 3% of the transaction amount.

Money.com.au’s Finance Expert, Sean Callery, says foreign transaction fees are one of the most overlooked travel expenses and one of the easiest to avoid if you’re willing to shop around.

“Most people look for savings on flights, accommodation and travel insurance — but forget about international transaction fees. These charges can quickly snowball into hundreds of dollars depending on how long your trip is or how often you travel. For example, if you spend $5,000 overseas, a 3% foreign transaction fee adds up to $150 in unnecessary charges,” he says.

“The zinger is, these fees are completely avoidable. There are plenty of credit cards and even some debit cards that don’t charge international transaction fees. Some credit cards even offer reward points or cashback on eligible purchases. It’s always worth doing a little research before your next trip.”

Two in five Australian travellers surveyed (41%) said they already use a debit or credit card with no foreign transaction fees.

Gen Z hit hardest by foreign transaction fees

The research found that Gen Z travellers paid the most in international transaction fees, forking out an average of $94 on their last overseas trip — more than double the amount paid by Baby Boomers, who averaged just $42 in fees.

Millennials were next highest and paid an average of $86 in foreign transaction fees, followed by Gen X at $72.

Money.com.au’s 5 tips to avoid hefty bank fees overseas

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