Credit card rewards 101

November 29, 2012, 9:22 am David Koch Yahoo!7

This is a good time to take a look at the benefits and bonuses your credit card offers.

With the busy Christmas period now upon us, it's an ideal time to take another look at the benefits and bonuses your credit card offers.

Making it an especially good time are some terrific new features on 'standard' cards that were previously reserved for premium card subscribers only.

Travel insurance, concierge services, price guarantees, extended warranties and VIP treatment are all on offer for savvy borrowers.

It's all part of the banking world's renewed effort to entice Australian consumers back into borrowing.

Credit card holders have almost completely stopped taking on more interest accruing debt with balances growing by a tiny 0.12 percent this year, compared to 10 percent to 20 percent per annum pre-GFC.

For Aussie households it’s a great sign that we’re getting back on top of our finances and the bonus is that banks are being forced to fight harder to attract new customers.

New research from financial comparison site RateCity has found that the number of credit cards offering more premium services has almost doubled since this time last year.

For example, there are now 97 cards that include travel insurance for the card holder and 78 cards that offer a price guarantee scheme.

In case you’re not familiar, a price guarantee means if you buy something and then subsequently find it cheaper or on sale somewhere, the card provider refunds the difference.

This is a particularly handy feature at this time of year with Christmas sales just around the corner.

And the best bit is that these cards have very reasonable interest rates too. According to RateCity’s Michelle Hutchison, while the average credit card interest rate is 17 percent at the moment, rates on these ‘semi-premium’ cards start from as little as 9.5 percent.

“We’re seeing traditional credit card types starting to merge where you can now find platinum cards offering low rates,” Hutchison says. The catch is they come with an annual fee, but as Hutchison says, they are great value if you know you’ll use the benefits.

“These type of cards are great for those who are happy to pay an annual fee in return for some extra benefits, but don’t spend enough to get real value from a rewards program.”

Of course annual fees vary, but they average around $100, so making sure you will use the facilities on offer before you join is essential. But given a couple of weeks travel insurance costs around $100 anyway, knowing you’ll use even one of the features could work out in your financial favour.

As usual it’s still important to look into the finer details of each card and exactly what the premium features entail, but you should be doing this with your existing card anyway to see if you’re getting the best deal available.

And with the internet doing half the work already, there really is no excuse.

“Financial comparison sites make the comparison of these cards much easier. But remember to look at the terms and conditions of each card as they do vary,” Hutchison warns.

“For example, a few include travel insurance but may differ on the number of days coverage or whether they include inconvenience insurance if you have travel plans delayed for whatever reason.”

So with that word of warning, what are the best deals currently on offer?

According to RateCity, Bankwest’s Breeze Gold Mastercard tops the list with an interest rate of 10.99 percent, purchase protection, travel insurance, price guarantee scheme and extended warranties on purchases all wrapped up in an $89 annual fee.

That’s an excellent deal.

But the others aren’t too far behind either. Citibank and ANZ both offer all of the above premium facilities at interest rates of 11.99 percent and 13.14 percent respectively. The annual fee on these cards is $99, although Citibank’s comes down to $49 for the first year.

Again, terrific value if these are services you will utilise.

So whether disillusioned with your credit card provider or not, spend 20 minutes today getting to the bottom of your current deal and compare it to what’s out there. Because, as Hutchison says, “the line between no-frills and premium cards is getting blurred, and the result is some great deals for consumers.”

Compare all the reward credit cards in the market now.

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