Rewards vs no frills credit card

Everyone wants free flights around the world delivered by their credit card for spending on items they would normally buy anyway. This is the dream and the promise of rewards credit cards. For people who spend a lot on their card, a rewards card with frequent flyer points or Virgin Velocity points may be good value.

However Reserve Bank of Australia figures show Australians owe billions on their credit cards. If you carry debt on your rewards card, the interest costs will possibly exceed the value of the points accrued. Annual fees also need to be factored in to the equation.

Financial adviser Scott Parry said: “Spending $300,000 to get a kettle isn’t worth it if you are paying an interest rate of 16 per cent.’’

Source: The Daily Telegraph