Credit cards have a simple purpose: providing you with access to credit and enabling you to spend with added flexibility. But choosing the right credit card for you becomes a bit more difficult when you start factoring in the add-ons. Balance transfers, annual fees and even what the card looks like can sway people in one direction or another.
More than almost anything else, rewards schemes are a huge incentive for people looking for a credit card . But when you crunch the numbers, are you really better off?
Rewards in name only
The concept of a rewards credit card is simple – the more you spend, the more points and/or bonus offers you gain. This could be movie tickets, cheap flights, priority seating at events – the list is endless.
But is the work you have to put in to claim these rewards worth it? According to Finder, many consumers need to spend more than $20,000 in order to claim as little as $100. At a minimum, most customers would typically have to spend $15,000 on a credit card to even begin accessing rewards.
Considering 76 percent of credit card holders spend less than $14,000 every year, that’s a small minority who would even get to benefit from the use of a rewards card each year. On top of this, annual fees for rewards cards are often in excess of $100.
You need to ask yourself – are rewards what you should really be basing credit card selection on?
How to smartly choose a credit card
Selecting the right credit card is all about finding something that gives you great value. With the mean interest rate sitting just above 17 percent on cards, Australians pay on average $700 a year in interest alone based on an average balance of just over $4,000.
Why not find a credit card that limits these costs, and gives you better value for your spending? At Beyond Bank, our low rate credit card  has an interest rate of just 12.49 percent, which can save someone about $200 per year compared to average interest rates.
If you’re not spending more than $15,000 in a year with your credit card, it’s time to start thinking about the facets of your card that matter most. Minimising interest payments and enhancing your spending flexibility will be key – that’s why a low rate credit card can work wonders.