Are Credit Card Rewards Worth It?

By the Aussie Credit Guide editorial team · Reviewed 5 October 2026

A rewards card pays you back a small percentage of what you spend and charges an annual fee and a higher interest rate for it. Whether that comes out ahead is arithmetic you can do in a few minutes.

The break-even sum

Three numbers decide it:

1. What you spend on the card in a year.
2. The earn rate, in points per dollar.
3. What a point is worth to you, based on how you would actually redeem it.

Multiply them together and compare the result with the annual fee. For example, $24,000 a year at 1 point per dollar earns 24,000 points. If you value a point at half a cent, that is $120 a year. Against a $175 annual fee the card costs you $55 a year; against a $59 fee it returns $61. The value per point is your own estimate, and it changes the answer more than anything else.

What a point is worth

Points have no fixed cash value. As a general pattern:

• Gift cards and cashback redemptions give a predictable, lower value.
• Flights can give a higher value, particularly premium cabins, but reward seats are limited and taxes and carrier charges are paid in cash.
• Merchandise from a rewards store is often the lowest value.

A simple way to value points is to look up something you would really redeem for, and divide its cash price by the points required.

What reduces the return

• Points caps and tiers. Many cards reduce the earn rate after a monthly or yearly spend threshold.
• Excluded transactions. Government payments, some bill payments and cash advances often earn fewer points or none.
• Program fees. Some cards charge a separate rewards program fee.
• Expiry. Points can expire, and are usually lost if the account is closed.

Interest wipes out rewards

Rewards cards generally have higher purchase rates. A return of around half a per cent on spending is tiny beside interest at more than 20% p.a. If a balance is carried even occasionally, a low interest card usually costs less overall.

Sign-up bonuses

Large bonus point offers require a minimum spend within a set period, commonly the first 90 days, and sometimes a second year of card fees for the full amount. They are for new customers and each application is recorded on your credit report. The current offers on cards we list are on our rewards comparison.

Programs can change

Providers can change earn rates and redemption values with notice. From 1 October 2026 the Reserve Bank lowered the cap on the interchange fees that help fund rewards programs, which may lead providers to revise them. See the card surcharge ban.

Cashback as an alternative

Sign-up cashback is paid in dollars, so there is nothing to value or redeem. See our cashback comparison.

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