Point savvy: building your portfolio of credit cards for 2020

Maximising credit card frequent flyer points isn't difficult, when you create a strategy that suits you.

By Chris Chamberlin, January 18 2020
Point savvy: building your portfolio of credit cards for 2020

There's been a seismic shift in the credit card landscape over the past few years, with every card issuer in Australia overhauling their points-earning plastic – impacting every credit card customer in the country as a result of the Reserve Bank’s adjustments to credit card interchange fees in 2017.

Despite these developments, credit cards can still be a rewarding way to collect frequent flyer points from everyday spending, but there are a few things worth keeping in mind when building your own portfolio of points-earning credit cards.

Choosing your frequent flyer program

When it comes to selecting which frequent flyer account to boost with your credit card spend, it makes sense to consider how you’re already earning points now.

For example, a business traveller regularly flying with Qantas and earning Qantas Points – or, with Virgin Australia and earning Velocity Points – may find the best value in having a credit card attached to that same frequent flyer program, allowing them to build on their existing and regularly-increasing balance of points to unlock their next flight even faster.

But it’s also wise to consider how those points can be spent before they’re earned, to avoid any disappointment when planning a holiday.

On the one hand, Qantas Frequent Flyer has significantly more airline partners than its rival Velocity, but in many cases, Qantas requires more points to book a comparable flight than Velocity, and is also known for levying hefty fees and surcharges on top of the genuine taxes when using points to fly.

Qantas Points can be used to book Emirates first class, but the fees on these bookings can be high.
Qantas Points can be used to book Emirates first class, but the fees on these bookings can be high.

Velocity isn’t immune from carrier charges – having hiked fees on Virgin Australia flights as recently as January 2020 – but doesn’t levy these when booking flights with most of its partners: the only exceptions being on Etihad (all flights), and on Delta between Sydney and Los Angeles.

That could make a bigger program like Qantas a good fit for those who don’t have defined travel plans, given its broader network of partners and flights on which those points can be spent, although smaller programs like Velocity may edge ahead when comparing specific itineraries.

An alternative path: bank rewards programs

When you’re not tied to one single frequent flyer program – or you’ll be spending enough on a points-earning credit to amass a meaningful number of points regardless – you could also consider a card that provides access to multiple frequent flyer programs.

Typically, this means first earning points in a bank’s own loyalty system, and later converting these into frequent flyer points with an airline of your choice.

This approach provides the best flexibility as you’re not locked to a single airline or alliance and don’t need to swap credit cards if those needs change, while also enabling savvier spenders to select which frequent flyer scheme to utilise each time there’s a flight to book.

With multiple frequent flyer programs to choose from, you may decide to convert some points to Velocity for one trip, but to instead ship them to the likes of Cathay Pacific Asia Miles or Singapore Airlines KrisFlyer for the next.

You can book Singapore Airlines flights using both Velocity points and KrisFlyer miles, but KrisFlyer members get better reward availability.
You can book Singapore Airlines flights using both Velocity points and KrisFlyer miles, but KrisFlyer members get better reward availability.

However, this comes with two downsides. Firstly, in Australia, cards that earn bank loyalty points usually provide fewer actual frequent flyer points per dollar spent when compared to ‘direct earning’ cards attached to a specific airline: the trade-off being that you retain the flexibility to send those points elsewhere if one airline adjusts the number of points needed to book a flight.

You also need to be mindful of the frequent flyer ‘conversion rates’ used in those bank loyalty programs, which not only affect how many frequent flyer points your bank stash is worth, but can also change over time, making the points you’ve already earned less valuable.

Card issuers usually provide notice of such changes, at least. In 2018, American Express gave cardholders five months’ notice when most of its Membership Rewards conversion rates were amended from 1:1 to a less generous 2:1, giving customers plenty of time to put their points to use, before they lost their value.

(With a 1:1 conversion rate, 100,000 bank points would be worth 100,000 airline frequent flyer points – but with a 2:1 rate, meaning every 2 bank points are worth 1 airline frequent flyer point, those same 100,000 bank points would fetch just 50,000 frequent flyer points.)

Got your points planned? Next, choose your card types

Knowing what kind of points you plan to earn makes it easier to find credit cards to match those goals.

A common approach by savvy frequent flyers is to have both an American Express card and a separate Mastercard or Visa: the aim being to use the AMEX card where it’s accepted to earn points at a higher rate, and the backup Mastercard or Visa everywhere else to continue earning some points.

This strategy makes the most sense when regularly shopping at places where American Express is accepted.

Some businesses may not accept AMEX – or, may levy a surcharge for its use, which may not be worth paying if Mastercard or Visa are accepted without charge, where points can still be earned.

Higher annual fees often mean higher value, but don’t overpay

Most points-earning credit cards in Australia come with annual fees attached: and generally, the more points that a card can earn, the higher the annual fee.

Some cards aim to offset these fees by bundling other perks such as airport lounge access, travel insurance, vouchers for travel bookings or even elite status with hotel chains, sweetening the deal even more so in the first year with a serving of bonus points for new customers who apply and spend a certain amount of money on the card.

Read: Best Qantas Frequent Flyer credit card sign-up offers

Also read: Top Virgin Australia Velocity credit card sign-up deals

However, some cards charge customers this fee without offering anything specific in return, other than the ability to continue earning frequent flyer points when spending.

Is your credit card offering more than just points when you spend?
Is your credit card offering more than just points when you spend?

In these circumstances, it may be possible to get more value out of a higher-fee card if travel perks come as part of the deal, or indeed, considering the merits of a no-fee card that still earns points, albeit likely not as many.

Take note of points tiering and capping

Whether you’re earning frequent flyer points directly with a single airline or making use of a bank’s rewards program, keep an eye out for restrictions known as points tiering and points capping.

Some cards may advertise a high earning rate per dollar spent, but after a certain amount has been charged to the card each month, may reduce this rate until the next monthly statement begins. This is known as points tiering.

As an example, some cards offer one Qantas Point per dollar spent up to $2,500 per month, after which, the rate is cut in half to 0.5 Qantas Points per dollar spent.

This means a customer spending $2,500 would earn 2,500 Qantas Points each month, but that a customer spending double that on the same card – $5,000 monthly – would earn just 3,750 Qantas Points, being 2,500 Qantas Points on the first $2,500 (1 point per $1), and 1,250 Qantas Points on the next $2,500 (0.5 points per $1).

Points tiering is usually preferable to points capping, which is instead a hard limit on the number of points a cardholder can earn every month or over a 12-month period, although some cards may apply both a points cap and a tiered earn rate.

There’s a silver lining to this, however – lower spenders may actually prefer a card which uses capping or tiering (or both), as the annual fees can often be lower, but the number of points earned per dollar spent on a lower-fee card could ultimately be the same as on a higher-fee card.

Compare, say, a card that earns one Qantas Point per $1 spent up to $2,500 per month as above, and a different card that earns one Qantas Point per $1 spent up to $7,500 per month.

A customer spending only $2,000 per month would in this case earn 2,000 Qantas Points from either card, making the annual fee and other inclusions more relevant comparisons than the points cap.

Also read: Qantas Points Club set for launch

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!

05 May 2016

Total posts 529

Considering I don't spend several thousand every month the only realistic way to build up a large points balance is to carefully plan switching cards to get sign up bonuses.

If a card pays 1 point per dollar uncapped to get 60k points you have to spend $60k. Whereas to get a sign up bonus of 100k points you have to spend a fraction of that.

04 May 2015

Total posts 247

If you're not spending ~$3,000 per month, you're probably not on a high income, and that has its own limitations when applying for credit cards (namely, that the best points cards often require a higher income, and have a higher minimum credit limit you need to qualify for). Doesn't make it impossible, but does make it more difficult with fewer options.

05 May 2016

Total posts 529

Spending $3k per month on credit cards at 1 point per dollar is 36k points per year. Still vastly inferior to getting 100k points with a sign up bonus for less spend.

Some of us choose not to put on cards bills where a surcharge would be charged to put it on card.

23 Oct 2017

Total posts 3

The article might be about the accumulation of points through spending but surprisingly not much said about sign on bonuses given its the best way to build your points up through "churning" cards. As an example the Qantas Premier card can get you 120000 bonus points now which would take most people years to earn by regular spending. Quickest way to the pointy end of the plane.

Qantas - Qantas Frequent Flyer

06 Nov 2014

Total posts 343

Sign up bonus isnt as easy to get as before. The recent changes on "responsible lending" makes applying credit much more difficult. I recently got rejected by ANZ black, and St George. This has never happened before. In fact I had ANZ black twice before for their sign up bonus and never had problem. Was easily approved within 24 hours. Not anymore.

Goodluck for people who wants to churn cards.

Qantas - Qantas Frequent Flyer

04 Nov 2011

Total posts 329

I have had the opposite experience, have applied and been successful on three cards recently for sign on bonuses with Citibank and Bankwest. For mine it's never been easier and I am pretty lax with the details I provide at application also. For reference my score is 860.

22 Apr 2013

Total posts 8

You hit the Nail on the head Michael, the sign up bonuses are lucrative although ultimately you're applying for credit.

This positive credit reporting doesn't seem to improve your success, I have a score of 810. The banks are now restricted compared to how they operated previously with easy & instant approvals.

Was also recently rejected for St George Amplify Signature & Citibank Qantas although in June last year easily obtained Westpac Black Amex bundle.

Still obtain this bundle & personal loan with no balances but with Mortgages, know this really affects the banks outcome of my serviceability.

My next strategy is to slightly reduce exisiting credit limits on current accounts & only consider the Intermediate Cards with the $6,000 minimum limit opposed to the premium $15,000 cards.

Hoping this strategy will successful with the Qantas Premier or Virgin Velocity Flyer.

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 228

The best option is to always cancel the card that you are changing from and get notifications from the issuer, that is then reflected in your serviceability if it is an issue. I just got the QF premium MasterCard and the 120,000 points should be easy to get, punted the Amex I have had for 4 years as I am tired of the ever increasing places that don't except it, something I think will increase as the pay later platforms expand. I am sure Amex will respond at some stage with something in response to decline and I will be happy to take advantage of it if they do.

Qantas - Qantas Frequent Flyer

06 Nov 2014

Total posts 343

I thought about canceling my cards as well. However, as Chris have suggested in the article, it's good to keep some flexible currencies like Amex MR. That's the reason I haven't cancelled my Explorer yet (but I have certainly canceled my Edge). Cancelling cards like Amex to just get bonus on QF points isnt really worth it. What if you can't find award flights on QF and its partner yet there are availability on SQ? Also note that CX has become rather stingy with award seats to partners so its handy to keep some Asia Miles.

I also have the Citiprestage, which has crappy point earn rate but has a few perk that's still worth keeping, such as the only CC in Australia that still offers unlimited lounge and restaurant access with its priority pass. Tue 4th night free is also a really nice perk. Citi has stopped taking new applicants so it's kind if nice to keep it.

I have canceled ANZ black twice in the past for the sake of sign up bonus. Now I can't get it back. So be careful of what we cancel. We might not be able to get good cards back as it's getting harder to apply.

14 Jan 2018

Total posts 4

If you've got an Aussie Amex issued credit card, very possible to do a global transfer for a US issued Amex credit card. There is a significant difference in annual fees between AU & US Amex Platinum charge card.

Obtaining Hilton Aspire US card for USD$450 a year gets Diamond Status with Hilton so can be worth the hassle to obtain that card if you stay at Hilton property. Also gets you priority lounge passes & $250 Airline credit, $100 Hilton resort fee to spend.

04 May 2015

Total posts 247

You need a US address and Social Security Number to do what you suggest: you can't just swap your Aussie card for a US one because you feel like it, it's a lot more involved and designed for those moving overseas.


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