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12 tips of Christmas #12: Get rewarded for your spending

Put your purchases to even better use by earning rewards whenever you spend money.

The lowdown

If you know you've got some big purchases to make over the coming year, it could be a good idea to look at a credit card that earns rewards that you can use for travel, shopping, gift cards, cashback or products.

Rewards credit cards can help you get more value from your purchases, but remember that these cards usually charge higher interest rates and annual fees. So these cards only make sense if you can pay your balance in full every month to avoid interest and earn enough points to outweigh the annual fee.

A rewards credit card is linked to a loyalty program, allowing you to earn reward points per $1 spent on the card. These points are then credited to your account. The rewards you can get with a credit card depend on the card you choose and the rewards program. Some of the most popular reward categories include flights, accommodation, upgrades, cashback, fuel vouchers and shopping discounts.

Here's how you do it

  1. Consider signing up for a bonus points credit card. These are usually frequent flyer earning credit cards which also come with an upfront amount of bonus points that you get for using your new card to spend over a certain amount in a given time frame (for example, in the first 3 months).
  2. Use points for holidays. If you were planning on going on holiday this year, make sure you use the card to book your flights. Not only will you get a load of points for the purchase, but you could score some free lounge access passes too.
  3. Sign up for supermarket rewards schemes and "double dip". Both Woolworths and Coles have free rewards programs you can sign up to. This means that you can earn points for your regular grocery shopping (plus they have partnerships with some department stores as well). You can transfer the rewards points you earn to airline frequent flyer programs (Qantas for Woolworths and Virgin Velocity for Coles Flybuys). When you go shopping for your groceries, pay for them with your frequent flyer credit card AND don't forget to scan your supermarket rewards card, so you can earn even more points.

Don't miss these tips:

Cancel as soon as the annual fee or interest charges outweigh the perks you're getting.

Make sure the rewards are something you'll actually use. Airport lounge access is great, but not if you don't travel.

Make sure you're not spending just for the sake of points. Purchases made on a rewards card should have been planned for in your budget already.

Check back each day in the lead-up to Christmas to get our latest expert personal finance tips.

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