Why Use A Rewards Credit Card?
A rewards credit card is a useful way to earn some money back on your spending.
Here on this blog we are always looking for ways to easily increase our income to buy assets.
Rewards credit cards are actually a (small) stream of passive income because you don't need to do anything to earn it.
Simply go about your regular life and you will earn money back on all your purchases.
For example, if you can get a rewards credit card with 1% cashback, that's essentially a 1% discount on everything you buy, whether it's gas, groceries, coffee etc.
Which Rewards Credit Card Should I Use?
Card providers will throw all kinds of special perks at you, but really only one metric matters:
Which card will make me the most money?
This will differ from person to person, because it largely depends on how much you expect to spend each year, and also what form you receive the rewards in (for example, Airpoints versus actual cash)
In this article we're going to analyse all the rewards credit cards in New Zealand and see which one will be most profitable for you.
How To Use A Credit Card Properly
There are a few caveats before you look at getting a credit card.
1. You must pay the card off in full every month
A credit card becomes useless if you are paying interest and/or late payment fees.
It's very unlikely any rewards you receive will outweigh the cost of interest and penalties.
If you are going to own a credit card, you must pay off the card in full, before the due date, every single month.
My suggestion is to set up a direct debit to pay off your card in full each month so it's automated and you don't forget (remember - automation is the secret to wealth!)
2. Don't get fooled by perks
It's easy to get fooled by special perks for some cards.
For example, one card might have an annual fee of $500, but will offer you free lounge access at the airport, worth $200!
Well, do you usually go into the lounge? (probably no).
Do you need to go into the lounge? (definitely no).
All that's happening is you're getting fooled into signing up for a $500 card, to get a perk you don't need anyway.
We're after hard profit with our rewards cards, which means hard cash in our bank accounts. Keep your eye on the prize.
Which Card Is Best?
Let's look at the cards available to us.
|Card||Reward Type||Welcome bonus||Annual fee||Reward Rate|
|American Express Airpoints Platinum||Airpoints||$300||$195||1.69%|
|TSB Platinum Mastercard||Cash||$90||1.43%|
|American Express Airpoints||Airpoints||$50||$0||1.00%|
|Dosh Visa Debit Card||Cash||$0||1.00%|
|BNZ Advantage Visa Platinum||Cash (via BNZPoints)||$90||1.11%|
|ASB Visa Platinum Rewards||True Reward dollar||$80||1.00%|
|SBS Visa Credit Card||Cash||$0||0.67%|
|Westpac Hotpoints Platinum Mastercard||Hotpoints||$70||0.83%|
|ANZ CashBack Visa Platinum||Cash||$80||0.83%|
|Westpac Airpoints Platinum Mastercard||Airpoints||$125||0.91%|
|ASB Visa Rewards||True Reward dollar||$40||0.67%|
|BNZ Advantage Visa Classic||Cash (via BNZPoints)||$40||0.67%|
|ANZ Airpoints Visa Platinum||Airpoints||$150||0.91%|
|American Express Gold Rewards||Membership Reward points||$200||$200||1.00%|
|Westpac Airpoints Mastercard||Airpoints||$70||0.67%|
|Westpac Hotpoint Mastercard||Hotpoints||$40||0.56%|
|Kiwibank Airpoints Low Fee Visa||Airpoints||$25||0.50%|
|ANZ Airpoints Visa||Airpoints||$65||0.59%|
|Kiwibank Airpoints Platinum Visa||Airpoints||$180||0.87%|
|ANZ CashBack Visa||Cash||$40||0.67%|
|Westpac Hotpoints World Mastercard||Hotpoints||$285||1.11%|
|Westpac Airpoints World Mastercard||Airpoints||$310||1.05%|
|American Express Platinum||Membership Reward points||$625||$1,250||1.00%|
They're not the easiest to compare, as they all give you rewards in different form.
These are the rewards you can get in NZ, in order from best to worst:
- Cashback (actual cash)
- BNZ Points (can be redeemed for cash)
- American Express Points (can be redeemed for credit)
- hotpoints by Westpac (can be used for regular purchases)
- Airpoints (to be used on Star Alliance/Air NZ flights or at Airpoints retailers)
- True Rewards by ASB (can only be redeemed with partners)
Obviously getting real cash is best.
BNZPoints can be redeemed for real cash, which is just as good.
AMEX Points can be used to pay off your card balance, which is pretty close to cash.
Westpac Hotpoints can be used to buy things like a regular EFTPOS card, which is pretty similar to cash, the obvious difference being you must spend your points, you can't turn them to cash to save in a bank account or invest.
Finally, Airpoints and ASB True Rewards points can only be redeemed at selected partners, which means not only must you spend them, you don't even get the freedom to spend them where you want.
This means I would prioritise getting the cards with real cashback rewards:
- Dosh Debit card
The clear leader here is the TSB Platinum card, which has a reward rate of 1.43%.
I'm also a fan of the Dosh Debit card, since it's 100% free.
I think it's a good option if you don't trust yourself with a credit card (or are not able to get one).
Since it's a debit card (basically a bank account) it can even be a good lesson in budgeting to transfer your spending budget for the month to your Dosh account to help you manage your finances, while getting a 1% cashback.
If you have kids, a Dosh card for them can be a great idea too. Start putting their allowance in there and they should get a little kick out of the 1% they get back every month.
It's also possible the other reward options might appeal to you - Airpoints, for example, may be just as useful as cash for frequent flyers.
How much you spend each year will also affect your decision.
Why Your Spending Level Matters
Remember - most cards have annual fees.
This means you will need to reach a certain level of spending before you offset the fee and become "profitable" with each card.
Does this mean it's best to just go with a zero fee card, even if the reward level is less?
I've got an easy table for you to check this:
|Full card names||Reward Type||$5,000||$10,000||$20,000||$30,000||$40,000||$50,000|
|American Express Airpoints Platinum||Airpoints||-$110.25||-$25.51||$143.98||$313.47||$482.97||$652.46|
|TSB Platinum Mastercard||Cash||-$18.57||$52.86||$195.71||$338.57||$481.43||$624.29|
|American Express Airpoints||Airpoints||$50.00||$100.00||$200.00||$300.00||$400.00||$500.00|
|Dosh Visa Debit Card||Cash||$50.00||$100.00||$200.00||$300.00||$400.00||$500.00|
|BNZ Advantage Visa Platinum||Cash (via BNZPoints)||-$34.44||$21.11||$132.22||$243.33||$354.44||$465.56|
|ASB Visa Platinum Rewards||True Reward dollar||-$30.00||$20.00||$120.00||$220.00||$320.00||$420.00|
|SBS Visa Credit Card||Cash||$33.33||$66.67||$133.33||$200.00||$266.67||$333.33|
|Westpac Hotpoints Platinum Mastercard||Hotpoints||-$28.33||$13.33||$96.67||$180.00||$263.33||$346.67|
|ANZ CashBack Visa Platinum||Cash||-$38.33||$3.33||$86.67||$170.00||$253.33||$336.67|
|Westpac Airpoints Platinum Mastercard||Airpoints||-$79.55||-$34.09||$56.82||$147.73||$238.64||$329.55|
|ASB Visa Rewards||True Reward dollar||-$6.67||$26.67||$93.33||$160.00||$226.67||$293.33|
|BNZ Advantage Visa Classic||Cash (via BNZPoints)||-$6.67||$26.67||$93.33||$160.00||$226.67||$293.33|
|ANZ Airpoints Visa Platinum||Airpoints||-$104.55||-$59.09||$31.82||$122.73||$213.64||$304.55|
|American Express Gold Rewards||Membership Reward points||-$150.00||-$100.00||$0.00||$100.00||$200.00||$300.00|
|Westpac Airpoints Mastercard||Airpoints||-$36.67||-$3.33||$63.33||$130.00||$196.67||$263.33|
|Westpac Hotpoint Mastercard||Hotpoints||-$12.22||$15.56||$71.11||$126.67||$182.22||$237.78|
|Kiwibank Airpoints Low Fee Visa||Airpoints||$0.00||$25.00||$75.00||$125.00||$175.00||$225.00|
|ANZ Airpoints Visa||Airpoints||-$35.59||-$6.18||$52.65||$111.47||$170.29||$229.12|
|Kiwibank Airpoints Platinum Visa||Airpoints||-$136.52||-$93.04||-$6.09||$80.87||$167.83||$254.78|
|ANZ CashBack Visa||Cash||-$6.67||$26.67||$93.33||$160.00||$160.00||$160.00|
|Westpac Hotpoints World Mastercard||Hotpoints||-$229.44||-$173.89||-$62.78||$48.33||$159.44||$270.56|
|Westpac Airpoints World Mastercard||Airpoints||-$257.37||-$204.74||-$99.47||$5.79||$111.05||$216.32|
|American Express Platinum||Membership Reward points||-$1,200.00||-$1,150.00||-$1,050.00||-$950.00||-$850.00||-$750.00|
You can sort the results to see which card earns you the most at each spending level.
Up to $20k of spending:
At $5k of spending, you'll get $50 back.
At $10k of spending, you'll get $100 back.
At $20k of spending, you'll get $200 back.
Keep in mind with Dosh, you get actual cash back, whereas with the AMEX you get Airpoints.
However, with the AMEX you often get a signup bonus too - up to $50 Airpoints dollars right off the bat.
If you fly with Air NZ, that might make the AMEX a better choice for you.
$30k of spending:
The TSB Platinum Mastercard is the clear winner, with $338.57 back in pure cash.
Over $40k of spending:
At $40k of spending, the American Express Airpoints Platinum is the leader in total rewards, with $482.97 back in Airpoints.
The TSB Platinum Mastercard is a close second, with $481.43 back in cash.
Unless you will definitely spend those Airpoints on a plane ticket you would have bought anyway, then the TSB card is the better choice here.
At $50k of spending the AMEX Airpoints Platinum continues to out-earn the other cards, with $652 in Airpoints, versus $624 in cashback against the TSB card.
However, again you need to consider the benefit of receiving cash versus Airpoints.
Cash is better in most scenarios.
However, if you're an avid Air NZ/Star Alliance flyer, then an Airpoints card might be better.
Also keep in mind the AMEX often gives you big signup bonuses up to 300 Airpoints dollars which is significant.
However, if you rarely fly, then getting real cashback is likely a better option.
Summary: Which Card Should I Get?
If you plan on spending less than $30k per year on your card:
- Either the Dosh Debit, or the AMEX Airpoints card.
- Both are great rewards cards with ZERO Fees.
- With Dosh, you get actual cash back, however, it's a debit card meaning you must pre-load it with funds.
- With the AMEX, you get Airpoints back instead of cash. You may also get a $50 Airpoints sign up bonus.
- I personally use the Amex Airpoints.
- Tip: If you can't decide, you can get both!!! They're both got no fees, so there's no downside or extra cost to getting both.
- You can apply for an AMEX Airpoints card here, and a Dosh Debit card here.
If you plan on spending $30k or over:
- The clear leaders are the TSB Platinum Card or the AMEX Airpoints Platinum.
- The AMEX Platinum is a much better earner, but you'll only earn Airpoints.
- The TSB earns slightly less, but you'll get actual cash back.
- With the AMEX Airpoints Platinum, you could get a $300 Airpoints signup bonus.
- Tip: You can get the AMEX Airpoints Platinum to take advantage of the signup bonus, use the card for a year, then switch to the TSB Platinum. This gives you the best of both worlds!