Low spenders, late payers can forget credit card rewards

BUSINESSDESK: If you fail to pay off your credit card each month or are a low spender, then chasing credit card rewards may be pointless, according to the findings of Canstar's rewards star rating survey.

Canstar New Zealand, which compares interest rates and star ratings for home loans, credit cards and savings accounts, rated 39 rewards programmes across 51 credit cards at two levels of annual spending: $24,000 and $60,000.

The survey found consumers fell into two major traps of simply spending more to earn extra points or ending up paying interest on their rewards.

"If you can't pay off your credit card in full each month, you will not only pay a higher interest bill but you will gain no benefit whatsoever from reward points," Canstar national manager Derek Bonnar said.

"You are better off with a low-fee, low-interest rate card to help keep your budget in the black.

"The key to benefitting from rewards is to understand the kind of spender you are and to link up with a card that fits your spending habits," Mr Bonnar said.

Canstar surveyed two different rewards categories, general cash/vouchers and frequent flyer points.

It found customers spending about $24,000 a year should opt for rewards programmes that offer cash, shopping vouchers and frequent flyer points, though warned they needed to watch out for the cards' annual fee and points expiry dates.

Credit cards offering the best general rewards in the $24,000 spend were the Bank of New Zealand's GlobalPlus American Express Gold card, followed by the National Bank's Cashback Rewards and Westpac's Hotpoints American Express.

The best flight rewards came from ANZ bank's Air New Zealand Airports Platinum and Qantas Frequent Flyer Classic cards.

This was followed by BNZ's GlobalPlus American Express Gold and American Express Standard cards.

Consumers in the $60,000 annual spend are warned to watch out for points of capping and point expiry.

The best general rewards were from the BNZ's GlobalPlus American Express Gold and platinum rewards card, followed by Westpac's Hotpoints-Titanium American Express.

ANZ Bank's Air New Zealand Airports Platinum card once again topped the flight rewards category, followed by BNZ's GlobalPlus American Express Gold and Platinum Visa.

Credit card rewards in the $12,000 spend were not rated by Canstar.

The survey said patrons should focus on accumulating instant or general rewards not frequent flyer points.