Are Credit Card Points Actually Worth It?
We all know someone who’s booked a Bali holiday on points and made it sound like the financial equivalent of winning the lottery. But if you’ve ever looked at your own points balance and wondered why it barely covers a one-way Jetstar fare to Hobart (off-peak), you’re not alone.
So, are rewards credit cards actually worth it? Especially if you’re planning to do something major like refinance your home loan or apply for a mortgage?
Let’s break it down.
💳 First: What are credit card points?
Credit card rewards programs, like Qantas Frequent Flyer or Velocity, give you points for every dollar you spend. Some cards even give bonus points for certain spending categories or offer sign-up bonuses. It’s easy to think “free flights = good,” but it’s not quite that simple.
💸 The hidden cost: Annual fees, interest, and temptation
Here’s the catch. Rewards cards often come with hefty annual fees, sometimes ranging from $100 to over $700 per year. Many also carry higher interest rates than standard cards, with some over 20%.
So unless you’re paying off your balance in full every month and earning enough points to cover the annual fee and then some, you might not actually be getting ahead.
Here’s a quick example:
You spend $3,000 per month on a rewards credit card = 36,000 points per year
Annual fee = $250
That might get you a domestic return flight worth around $300
Your “profit” = $50, if you used the points wisely and avoided interest
But if you carried a balance and paid just $40 in interest? You’ve already lost your advantage.
🏦 From the bank’s POV: Do credit cards hurt your chances of refinancing or applying for a mortgage?
Short answer: yes, they can. Even if you’re not using them.
Banks look at your total credit limit, not just your current balance. That $15,000 limit you’ve never touched? A lender sees it as potential debt you could rack up tomorrow, which lowers how much they’re willing to lend you.
Here’s how it plays out:
For every $1,000 of credit card limit, your borrowing power can drop by around $5,000 to $10,000
So if you’ve got $20,000 in credit limits across a few cards “for the points,” you could be reducing your borrowing power by $100,000 or more
This matters when:
You’re applying for a new mortgage
You’re refinancing your home loan
You’re trying to show a lender that you’re in full control of your finances
🏆 Do the points ever genuinely make it worth it?
They can, but only if:
You pay your card off in full every single month
You were going to spend that money anyway
You redeem your points well (think flights, not toasters)
You’re not planning on refinancing or applying for a loan soon
Basically, if you’re debt-free, have good savings habits, and know how to game the system, credit card points can work in your favour.
But if you’re focused on saving for a deposit, paying down a mortgage, or just keeping your finances tight, they’re often more effort than they’re worth.
💡 Our verdict?
Points are nice, but low fees, strong savings, and a clean credit report are nicer. Especially if big financial goals are coming up soon.
Instead of chasing points:
Consider a no-fee or low-fee card
Put your annual fee into a high-interest savings account
Focus on reducing debt and boosting your borrowing power
Your future self (and your mortgage broker) will be glad you did.
***Please remember our blogs aren’t intended as financial advice - they’re intended only as a starting point to give you a little extra info! For more in-depth advice catered to your personal financial position, please see a certified financial advisor.