Being able to use the companion American Express card that comes with a platinum reward-based Visa and or MasterCard is the key to premium card holders getting the best return on their money.
Financial products comparison company Canstar gives its top credit card ratings to the big four banks for people spending $60,000 a year on their platinum credit cards.
But it says the type of rewards people redeem for their points can have a significant effect on the dollar return value.
Know your habits
Card holders looking for rewards to suit their spending habits need first to decide whether they want free flights, cash back or vouchers from a variety of stores such as Coles or Myer, or general rewards such as toasters or exercise bikes.
Then there are the extra benefits, including concierge services for help booking travel, accommodation and entertainment, and insurances such as for travel or purchase protection on items bought using the credit card. Expect subtle differences between the cards.
Canstar analyst Adam Beau says the biggest differentiator between the platinum rewards cards is the earn rate (the number of points you get per dollar spent) and the conversion rate (the number of points it takes to convert back to cash, a free flight or goods and services).
Two competing cards may earn the same points per dollar spend but an item can cost 3000 points in one program and 7000 points in another, he says.
But even lower annual fees help the net reward return.
A few catches
Something to watch for is the maximum points you can earn within a one-year period; one bank caps its points at 250,000.
Points expiry may also be an issue if you intend to stockpile. While most cards are indefinite as long as the card remains active, one card’s rewards expire after about three years.
For all the bank-issued cards the provider will be either Visa or MasterCard and it will probably include a companion Amex card.
In all cases consumers will earn more points for every dollar spent if they use their Amex card instead of the others, but the big issue with Amex is the comparatively low level of merchant acceptability compared with other cards.
The benefit for the consumer is having two credit cards with one account, one annual fee and one due date.
According to Visa, the stipulation is that all Visa Platinum cards need to include a concierge service and travel insurance of $500,000 – beyond that the banks themselves differentiate their
Other benefits might include extended warranty insurance on items paid for with the card and interstate flight inconvenience insurance.
Visa also offers frontline access to platinum card holders – where tickets to shows are offered ahead of pre-sales.
Editor of comparison website CreditCardFinder Jeremy Cabral says there may be subtle differences between the insurances covered by the card.
For example, Zurich, the underwriter of the insurances on Westpac cards, requires that to activate the travel insurance the total value of the return tickets is paid for using the Altitude card prior to travel. To be covered by the travel insurance on the ANZ card, which is underwritten by QBE, the card holder must have paid at least $250 in pre-booked travel costs using the card (both examples as at June 2012).
One of the main differences between using the complimentary travel insurance that comes with a card and an independent travel insurance policy is the excess and the activities covered. Separate policies allow the insured to choose an excess as low as $100, whereas the card cover excess is set at $200 for most items.
Extreme sports such as skiing or rock climbing are not automatically covered by the card cover but can be covered using separate policies.
Another convenient insurance on offer to platinum card holders is rental cover when you hire a car from a major car rental company in Australia, at no extra cost.
Fine print warning still applies
The excess varies between cards: as with all insurance cover it is important to read the fine print.
Then there is purchase security insurance where goods bought using the card are covered against loss, theft or damage for a period after purchase.
CreditCardFinder’s Cabral says that to make the most of a platinum credit card, holders need to ensure they pay the card off in full every statement period and spend enough to ensure the value of the rewards exceeds the cost of the annual fee.
He also says potential card holders should be wary of the banks’ push for people to take out platinum cards through attractive introductory offers such as low or zero interest rates for a set period for transferring a balance from another card.
Platinum cards have already replaced most gold cards and the minimum income required to get a card has dropped to $50,000 – but they aren’t right for everyone, Cabral says.
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