Building a portfolio of credit cards for maximum frequent flyer points

By Chris Chamberlin, January 13 2015
Building a portfolio of credit cards for maximum frequent flyer points
Disclaimer

Executive Traveller may receive a commission when you apply for these credit cards via our links.

You should seek independent advice and consider your own personal circumstances before applying for any financial product.

TRAVEL STRATEGY | Using credit cards responsibly is a great way of racking up frequent flyer points – but if that’s your ultimate goal, having several different cards in your wallet could get you there even faster.

For example, a common strategy is to use a high-yielding American Express card wherever it’s accepted, and to keep a backup Visa or MasterCard in your wallet for where it’s not.

Many credit cards also award bonus points on certain transactions, such as when paying for flights, visiting the supermarket or dining out, which is where it pays to shop wisely.

Once you’ve picked your preferred airline, here’s how to optimise the frequent flyer points you earn on credit card spend.

Choose your everyday American Express

On everyday American Express transactions, we’d expect no less than 1.5 Qantas or Virgin Australia Velocity Frequent Flyer points per dollar spent – any fewer and you’re falling short of your frequent flyer potential.

NAB’s Qantas Rewards Premium and Velocity Rewards Premium cards fit the bill nicely, reeling in that full 1.5 frequent flyer points in each respective scheme at a cost of $250 and $150 each year, respectively.

You’ll also get free travel insurance, extended warranty cover on your new appliances, protection against lost, stolen or damaged purchases and more (conditions apply).

That, combined with the value of the points you’ll pick up along the way, will more than cover the card’s annual fee.

Choose your everyday Visa or MasterCard

NAB’s Premium Rewards cards come with both an American Express and a Visa on a single credit card account, yet the earning rate on the latter is a mere 0.5 points per dollar spent.

If you regularly find yourself reaching for your backup card where your prized earner isn’t accepted, invest in a solid Visa or MasterCard that pockets at least one point per dollar spent.

You’ll find that on the Woolworths Money Qantas Platinum MasterCard for $139 each year and the Virgin Australia Velocity Flyer Card for $129 p.a.

Rather than using a NAB Visa for just half a point per dollar, whip out either of the above to double your points haul on every transaction.

Choose your credit card for spending abroad

International travel is a great way of notching up point after point, yet it doesn’t end at baggage claim.

Rather, the HSBC Qantas Platinum Visa dishes out an impressive two Qantas Points per Aussie dollar spent overseas, while the Bankwest Qantas Platinum MasterCard awards 0.75 points on the same outlay.

Setting them apart is the international transaction fee – HSBC levies 3% on all purchases, while Bankwest waives this fee for its Platinum cardholders.

In other words, you’re effectively ‘buying’ Qantas Points for 1.5c each from HSBC and zero cents, or free, via Bankwest, atop respective annual fees of $199 and $160.

Occasional international travellers needn’t worry with a dedicated card – everyday Visa, MasterCard and American Express plastic generally earns at the same rate wherever you swipe, although be mindful of any international transaction fees that may apply.

Choose a card for where you spend the most

Are your credit card statements littered with airfare purchases, restaurant charges or grocery and petrol costs? Chances are, there’s a credit card for that.

Take a look at this dynamic duo from American Express – the Qantas American Express Ultimate Card and the American Express Platinum Edge – which have terrible earning rates on everyday spend but make up for it through bonus points on specific transactions.

For example, the Qantas Ultimate card pulls in a whopping three points per dollar on Qantas flights, Qantas Club membership and restaurant spend, plus two points per dollar with other airlines, travel agents and when overseas against a $450 annual fee.

In a similar way, you’ll earn three frequent flyer points per dollar at supermarkets and two frequent flyer points per dollar at petrol stations for $195/year via the Platinum Edge, which could be handy for larger households that spend heavily in these categories.

Minimise annual fees: avoid similar credit cards

You’ll save on fees by taking the best card from each category above, finding where they overlap in features and earning rates and ditching those that become redundant.

From our top picks, the HSBC Qantas Platinum Visa not only earns two points per Aussie dollar spent abroad, it also nets one point per dollar on home soil, doubling as an ideal card for overseas spend and as your everyday non-AMEX card in Australia for a single annual fee.

Likewise, NAB’s Qantas Rewards Premium American Express has its impressive 1.5 points per dollar earning rate and delivers an enviable 2.5 points per dollar when booking Qantas flights or paying for Qantas Club membership with the card.

From our example, you’re left with just two credit cards – NAB Qantas Rewards Premium for your everyday spend and for booking Qantas flights, and the HSBC Qantas Platinum Visa to use where AMEX isn’t accepted at home and for every transaction abroad.

Our final tips

While the cards highlighted above can be used as part of a general frequent flyer strategy, they won’t necessarily suit your particular needs – so be sure to do your own research and make your own decisions before pulling the trigger and applying for a new credit card.

It’s also best to pay off your credit card in full each and every month to avoid any interest charges, as these quickly negate any value you could derive from your frequent flyer points.

Finally, be mindful of any points capping arrangements that may apply to your selected credit card – which can limit or even halt what you’ll earn each month or year despite the advertised per-dollar earning rates.

What’s your credit card strategy? Do you rotate between several different cards, or use one all-purpose card to keep things simple? Share your strategy with others in the comments section below!

Follow Australian Business Traveller on Twitter: we're @AusBT

Disclaimer

Executive Traveller may receive a commission when you apply for these credit cards via our links.

You should seek independent advice and consider your own personal circumstances before applying for any financial product.

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

Virgin Australia - Velocity Rewards

02 Mar 2013

Total posts 19

What about the diners club card with the MasterCard attached to it? Where diners is accepted 3 points per dollar which translates the 1.5 points for QFF, or 6 points per dollar abroad. The MasterCard gives 1.25 points per dollar on their reward program. Half these points to transfer to an airline. 

The only problem with Diners Club is acceptance – which will stand in the way of your points earning.

It's welcome at the 'biggies' such as Woolworths, Coles, the airlines, major hotels and some restaurants, but a significant number of retailers still don't welcome the card, and many surcharge.

Overseas, it's welcome as either a Diners Club or a Discover card, but it doesn't have the same reach as Visa, MasterCard or even AMEX.

The backup MasterCard is okay, but if you'll be reaching for it more often than not, it's a better idea to get a standalone, high-earning Visa or MasterCard that brings its own benefits.

(Of course, as the article suggests, different cards suit different needs. If Diners Club is mostly accepted where you transact and the annual fee is acceptable to you against the number of points that you'd earn, then by all means consider it as part of your line-up!)

30 Aug 2013

Total posts 448

You lost me at 'where Diners is accepted'

30 Aug 2013

Total posts 448

I’ve always used this 3-pronged strategy for my credit cards. While both VA and QF points are extremely easy to earn (both through credit card spend and the various bonus promotions both programs offer) I value VA points more highly then QF points, firstly because VA do not impose the ridiculous fuel surcharges on award tickets, and also VA points are much easier to use given QF’s very poor award availability. So I look for CCs that will earn VA points.

I currently have the NAB Velocity Amex which earns 1.5 pp$ which is as good a rate as I’ve seen a direct sweep card offer. For Visa I have the Velocity Flyer which I’ve had for years. Although they gutted the brilliant 2-4-1 flights offer a year ago its still worth having as the offer usually saves a little bit of money and is a reliable 1 pp$ card to have.

 I cannot understand people paying FX fees overseas though, regardless of earn. I’ve always stuck with the 28 degrees Mastercard which has no fees for purchases ever (earns no points though). QF points are not worth ‘buying’ for 1.5 cents each and I’m guessing you’ll be slugged with a pretty unfavourable exchange rate on the purchases which will make it even worse value. I don’t trust using credit cards overseas (except my 28 degrees) as there are traps everywhere. 

It’s amazing how many people don’t know all this stuff and blindly incur fees and charges for no benefit every time they use their card.

S
S

13 Sep 2013

Total posts 115

I do exactly the same thing.

I was pretty upset too when they canned the original conditions on the 2-4-1 flights with VA though. Partner and I always flew business when flying domestic with that offer. Was great!

30 Aug 2013

Total posts 448

My last use of the 2-4-1 was to book Flexis MEL-PER-MEL and then use my Plat comp upgrades to upgrade to J. Turned out to be about $450 pp return in J instead of $2,000 pp return in J. Even the woman at the call centre doing it all said 'gosh this is good value'.

Flights were brilliant - partner very impressed!

S
S

13 Sep 2013

Total posts 115

I guess that's why they stopped it. The value was incredible.

One of the first times I did it, I booked SYD-PER-SYD Flexi, 2-4-1. Then upgraded with points, whilst VA was having a half price points offer.

So it was $250 pp each way + 5000 points. Unbelievable!

QF

11 Sep 2012

Total posts 21

I have the Virgin Money Visa and used the  2-4-1 ticket price deal several times last year and had no idea they've stopped it! Is this for all card holders, or just new applicants? Slightly off topic, but if that's the case I might be looking to change cards pretty soon!

S
S

13 Sep 2013

Total posts 115

It's still available. But 2 years ago the T&Cs were significantly better. You could book any class of ticket and the fares literally were 2-4-1. Not the current 'Buy one, get the second one at a reduced rate' and it only applies to the cheapest possible ticket.

Qantas - Qantas Frequent Flyer

26 Sep 2011

Total posts 85

In every one of these assessments you assume that the cardholder actually pays the annual fee. I don't pay the annual fee on my ANZ Black card because it is waived as part of my total banking package

Virgin Australia - Velocity Rewards

13 Jan 2015

Total posts 593

You said exactly what I was thinking whilst I was reading this.  I get the Suncorp platinum visa for free with my package (works out to be 0.625 p/$ once redeemed) and the free Velocity escape card direct from AMEX which is 1 p/$.  For foreign currency transactions I use the Velocity global wallet to get 1 p/$ equivalent in foreign currency.

22 Jul 2011

Total posts 19

Agree with smit0847 - Qantas 'Points' are worth too little and continually devalued to let yourself be locked into a direct earn credit card situation. Velocity is much better, but to protect against devaluation I warehouse in American Express Membership Rewards and Citi Rewards. There's also no ridiculous points capping nonsense like there is on many direct earn cards.

And getting an extra one point for overseas spend is financial suicide compared to the conversion fees which are charged. It is financially illiterate for card companies to tout this as a benefit.

Virgin Australia - Velocity Rewards

28 Apr 2014

Total posts 37

In order to negate or overcome foreign exchange fees, what other cards do people use here?

When using my European MasterCard in Australia I quite often are asked by the electronic card terminal to either charge myself in Euros or local currency. Do Australian cards get similar options abroad, and which option is best??

Qantas - Qantas Frequent Flyer

18 Jul 2014

Total posts 9

Yes you do. Used my 28 Degrees GE MasterCard in Shangri-La KL and was offered the option to pay in MYR or AUD. Best to stick with the local currency as the hotel/merchant conversion is never as good. 

It worked out to 2.6 to 1 AUD by the hotel vs 2.7 to 1 AUD by the credit card rates. 

Virgin Australia - Velocity Rewards

28 Apr 2014

Total posts 37

And what about the Virgin Global Wallet prepaid cards for spending abroad??

Is it worth the hassle for foreign exchange free payments with 1 point per 1 AUD..?

Virgin Australia - Velocity Rewards

28 Apr 2014

Total posts 37

Also, is there any point (if intending to pay the full balance monthly anyway) to opt for American Express charges cards instead..?? Or are the earn rates or T&C's not favourable at all??

 

Note: The free Velocity Red American Express card earns 2 points on Virgin Australia spend.

bmc
bmc

Virgin Australia - Velocity Rewards

22 Aug 2013

Total posts 169

Any updates on best card for tax office spend?

Virgin Australia - Velocity Rewards

28 Apr 2014

Total posts 37

The inclusion of one free domestic economy return ticket on Virgin Australia for selected routes (from Perth coast-to-coast is included) on the American Express Platinum Edge card more than offsets its yearly fee.

https://www.americanexpress.com/australia/campaigns/platinum_edge/destination_guide.shtml

Virgin Australia - Velocity Rewards

28 Oct 2014

Total posts 19

One thing worth noting, is don't get caught up by "no foreign exchange fee" on 28 Degrees, compared with say 3%-3.3% fee with Citibank.  I can assure you that all is not what it seems - Citibank applies an exchange rate for all foreign transactions including credit card, which is VERY close to the interbank rate, typically within 1% spread, before applying the circa 3% fee.  To give an example, I have both the Bankwest "Zero Platinum Mastercard" (with "zero fee" for foreign $$ spend), and the Citibank Prestige Card.  The final exchange rate levied is very very similar... because Bankwest and major banks tend to work on 3-4% spread (or more!) on most currencies.  The difference is, I get 3.33 Velocity miles per $$ spent with Citi compared to nil with Bankwest.  (Admittedly the annual fee of $700 on Citi Prestige is astronomical, but it's a similar story on their VISA Signature card @ $299 per year currently).   And, as for Travel Money cards" with zero fee... it's rubbish... exchange rate is terrible.

Virgin Australia - Velocity Rewards

28 Apr 2014

Total posts 37

But how can you know in advance - prior to selecting a certain credit card out of the huge pile of variaties - what foreign exchange rate spread (be it <1% or 3-4%, or 'terrible' as with travel money cards) will be applied on foreign currency transactions..??

Virgin Australia - Velocity Rewards

28 Oct 2014

Total posts 19

Google.  "Citibank foreign exchange rates" "Bankwest foreign exchange rates" "NAB foreign exchange rates" etc etc ... the published Citibank rate less 3% is not far off Bankwest's rate as published.  I realise the banks may apply a different rate via VISA/MC than that published on their websites but in my experience (extensive, 5+ premium AU credit cards and shop + travel overseas regularly) - the general rule still applies.

I would LOVE for AusBT to test my understanding of this.  I always laugh when I see foreign exchange booths promoting "no commission".  Wonderful semantics... the commission is hidden within a very crap exchange rate 9 times out of 10!!  Akin to Bankwest "no foreign exchange fee" on Platinum cards.

26 Jan 2015

Total posts 2

Heads up on the woolies card, the earning rate will reduce to $1=1 point for the first $2500 and then $2 = 1 point after that from march


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