Australia
Low Rate vs Rewards Credit Cards in Australia: Which One Actually Costs Less?
Rewards cards carry higher rates. If you carry a balance, that gap costs more than the points are worth.
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- Low-rate card APR
- About 8%-13%
- Rewards card APR
- About 20%-22%
- Points value
- 0.5-1 cent each, typically
- Break-even
- Only when paid in full
The rate gap is the whole argument
A 9-point rate difference on $4,000 is about $30 a month. Earning 0.75 points per dollar on $1,500 of spend is worth roughly $11 a month.
Rewards win only if you clear the balance
Paid in full, the rate is irrelevant and the points are free money. Carrying a balance, the higher rate eats them.
Watch the annual fee on rewards cards
$150-$400 is common. That needs a lot of points to justify, and the value per point is usually poor.
Low-rate cards are simpler
No fee, no points to track, a rate below half the market. For anyone carrying a balance it is the cheaper product by a wide margin.
FAQ
Are rewards cards ever better?▾
Only if you clear the balance monthly and use the perks.
Do low-rate cards have fees?▾
Usually minimal or none.
Can I have both?▾
Yes - low rate for the balance, rewards for spending.
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