Credit card reward schemes are heavily promoted, luring customers with the promise of free flights and money to spend on shopping sprees. But unless you’re a big spender, the rewards you earn can be less than impressive.

We compared 29 cards to find which gave the most bang for your buck after spending $25,000 over two years. Best case scenario: you’ll have enough rewards points to enjoy a small treat. Worst case: the high annual fees on some cards mean you won’t even get close to the runway or the shopping mall.

Flight rewards

Reward schemes have a dizzying array of terms and conditions. Different cards (classic, gold or platinum?) have different fees, earning rates and reward systems (Airpoints, Fly Buys, Hotpoints, True Rewards …).

When we last looked at these schemes in 2011, the returns they offered were disappointing. Not much has changed.

Even spending $25,000 over two years, none of the cards would pay for a $600 return flight from Auckland to Sydney. When we deducted the cost of annual fees to get the net value, eight cards resulted in a negative return.

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Shopping rewards

High card fees also mean earning points to buy goods can be less than rewarding. Eight of the 19 cards that offered shopping voucher rewards had a negative net value.

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Rewarding behaviour

Whether you reap returns from a reward scheme will depend on the card fees, how you use your card and where you can use it.

Unless you’re a big spender, the returns are likely to be limited. And if you don’t pay off your credit card balance each month, interest charges on the unpaid balance will quickly outweigh the value of any rewards.

There’s less doubt about the value of these cards to their providers. As well as encouraging loyalty, reward schemes give companies access to a wealth of data about their customers’ shopping habits, tastes and lifestyle. It’s this data that’s the real pot of gold these schemes offer.

Companies use the personal information they collect about you to target promotions and develop their advertising and marketing strategies. They can also share the information with other data analysis companies.

Before you sign up, you may want to consider whether the rewards you receive in return for giving up this information make it a fair exchange.

We say

  • Credit card reward schemes aren’t designed to reward frugal spenders. You need to spend big to earn big.
  • Don’t spend just to earn a few extra points: the returns aren’t worth it. These schemes only make sense if you earn points as part of your regular purchases.
  • If you’re selecting a rewards card, make sure you take the annual fees into account. High fees can quickly erode the value of the points earned.