Rewards cards' value proposition declines

Card issuers are destroying the value proposition of their rewards cards by pushing up fees and reducing points' earning rates, says the comparison website Mozo.com.au.

Mozo's latest survey of the rewards card market, which was released this week, shows that 31 out of the 96 cards reviewed have fees that are higher than the rewards on offer, and 46 of the cards return less than A$20 of net value. Mozo's assessment is based on a consumer spending the average amount of $17,000 a year and not taking advantage of bonus points offers.

Mozo director Kirsty Lamont said the rewards card's value proposition had deteriorated markedly in recent years. Lamont said: "When we first surveyed this market, in 2010, we found that 20 per cent of cards had fees that were higher than the rewards on offer. Now it is 32 per cent."

Mozo found that only 14 out of the 96 cards reviewed offered a net value of more than $100 a year.

Lamont said that the benefit of even good cards was marginal. "On average, a good value card will give you a one per cent return," she said.

She said the trend in the market over the past few years has been for issuers to reduce the benefits available on standard and gold cards to encourage consumers to take higher-cost platinum and other premium cards.

"If consumers upgrade to a premium card but only spend around the average amount they will end up with the worst deal," she said.

For a consumer who sends $17,000 a year on their card, Mozo rated American Express' Velocity Escape, Jetstar's Platinum MasterCard, Qantas' American Express Discovery, NAB's Velocity Rewards and ANZ's Rewards Platinum as the best value cards.

For consumers who spend $60,000 a year, Mozo rated Jetstar's Platinum MasterCard, Westpac's Singapore Airlines Platinum, ANZ's Rewards Platinum, American Express' Velocity Escape and Westpac's Altitude Black as the best value.

And for consumers who spend $120,000 a year, Mozo rated Westpac's Singapore Airlines MasterCard, Westpac's Altitude Black, ANZ's Rewards Platinum, Commonwealth Bank's Diamond Awards and Jetstar's Platinum MasterCard as the best value.