23-May-2019 • Credit Cards

Over a third of Aussie rewards card holders say their card is costing them money rather than rewarding them with value, according to a new ME study.

ME surveyed 1,000 credit card holders on the dollar value benefits they get from their rewards cards, and of those surveyed, 37% said their card provided them negative value, revealing it is actually costing them money to maintain despite the rewards offered.

The most common (20%) dollar benefit received each year was only ‘up to $50’. The remaining participants reported getting more benefit for their buck, though in dwindling proportions; $50-$100 (14%), $100-$200 (11%), $200-$300 (7%), $300-$500 (5%) or $500 plus (7%).

When looking at the results above, ME’s Credit Cards Specialist Christopher Mak said “It’s staggering to see over half of rewards card holders believe the dollar benefit they get from their card is less than $50 a year.”

The study also highlighted the lack of transparency in rewards card offerings and how a lack of understanding of the product can contribute towards a card costing you in some cases.

When asked how transparent the dollar value earned is on your rewards credit card, over a third (36%) of rewards card holders said they’re unclear on the dollar value, despite many (37%) saying they have a credit card purely to benefit from the rewards.

“It’s a worrying sign when approximately 1 in 3 people don’t understand what value they’re actually getting from their rewards credit card,” said Mr Mak.

“Banks need to do a better job at offering products that are simple, fair and transparent to their customers,” said Mr Mak.

Further results from the research looked at the eroding dollar value of rewards in response to regulation changes over recent years. Where costs have gone up, a number of reward card providers have passed these costs onto consumers by reducing the value of the rewards or increasing fees.

ME’s study confirmed the decline in rewards value is being felt by consumers, with 50% of rewards credit card holders saying they think the dollar benefits have changed or diminished over time since they first took out the card.

“Credit cards are an important financial tool, but it’s important to be real about how you plan to use the card. Rewards on credit cards can be appealing, but be aware that you usually pay for them in some way – either through a fee or a higher interest rate.

“The key take away is to understand what you are up for, and if you are having trouble managing debt, you might question whether a rewards card is the right option for you.

“Take the time to find a card that best matches your needs,” said Mr Mak.


Editor notes: ME surveyed 1,000 Australian credit card holders via survey provider Pure Profile.