Disclaimer: The information in this article is for informational purposes only. Before making any decisions about credit cards or rewards programs, consider your financial situation and, if needed, seek advice from a qualified professional.
Are you a fan of rewards points? You’re certainly not alone. Across Australia, many enjoy collecting points through credit cards, loyalty programs, and shopping offers, hoping to earn free flights, cashback, or even that shiny new appliance we’ve been eyeing.
These rewards can feel like a well-deserved bonus for years of careful budgeting and spending, making everyday purchases more rewarding. However, a new study has revealed a surprising downside to chasing these points.
A recent survey by Finder, a well-known comparison website, has uncovered a worrying trend among Australian credit card holders. Millions of us are spending more than we should—and sometimes even going into debt—to chase those elusive rewards.
Of the 452 surveyed, two in five admitted they struggled to meet the minimum spending requirement to unlock bonus points.
Even more concerning, 11 per cent confessed they’d ended up in debt just to hit those targets, and nearly one in six said they’d spent more than usual to qualify for rewards.
Crunch the numbers; an estimated 2.6 million Australians have either overspent or fallen into debt in pursuit of rewards points. That’s a lot of people paying more than they bargained for.
Why do we fall for it?
It’s easy to see the appeal. Who doesn’t love the idea of a free holiday or a little extra cash in their pocket?
But Angus Kidman, Finder’s rewards points expert: ‘Rewards programs offer attractive perks, but the moment you’re spending more than you can afford or going into debt to get rewards points is the moment you stop saving money and start losing it.’
‘If you’re not paying attention, your rewards could cost you far more than you bargained for.’
One of the biggest traps is the minimum spend requirement. Many rewards cards dangle a juicy carrot—thousands of bonus points—but only if you spend a certain amount within the first few months.
This is easy enough for some, especially if big expenses are coming up. But for others, it can mean buying things you don’t need, just to hit the target.
Kidman’s advice? Find the minimum spend requirements and see if they match your usual spending.
‘If it doesn’t, consider timing your application for when you’re planning a big-ticket purchase, like your yearly holiday or new furniture.’
It’s not just about how you earn points but also how you spend them. Many of us are guilty of spending points on low-value items—think toasters, kettles, or gift cards—when the real value often lies in flights or high-end experiences.
Some redemptions can be worth as little as half a cent per point, while others (like business class flights) can be worth much more.
So, research to ensure you get the best value before you cash in your hard-earned points.
Why we overspend
There’s a reason rewards programs are so effective: they tap into our love of a good deal and our fear of missing out.
The thrill of earning points can make us feel like we’re getting something for nothing, even if we spend more. It’s a classic case of ‘spend to save’—but as this study shows, it doesn’t always add up.
Here are some tips for smarter rewards card use:
- Stick to your budget: Only use your rewards card for purchases you’d make anyway.
- Pay off your balance: Interest charges can quickly wipe out any value from rewards.
- Time your application: Apply for a new card when you have big expenses coming up.
- Compare redemption options: Flights and travel often offer the best value for your points.
- Don’t chase points: If you’re tempted to overspend or go into debt, it’s not worth it.
Have you ever spent more than you planned to earn rewards points? Do you think the perks are worth it, or has the fine print burned you? Share your experiences and tips in the comments below.
Also read: Is your Everyday Rewards card about to get worse? Woolworths’ latest change leaves shoppers furious
