Third of credit card holders forego flight points to claim vouchers

Australians are opting to cash in credit card points for grocery vouchers and gift cards instead of retaining rewards to spend on flights.

A RateCity survey found one-in-three cardholders during the coronavirus pandemic decided to redeem points to use on food, shopping and entertainment purchases instead of retaining points for flights.

About 28 per cent of respondents had spent points during the lockdown, primarily on essential grocery items.

A further 26 per cent said they were holding onto their flight points until restrictions eased and domestic and international travel could resume, while 4 per cent of people noted they had close their credit card accounts during the health crisis.

RateCity research director Sally Tindall said flights were usually the best points deal; however, the onset of the health crisis and the halt on travel had made people reassess their financial priorities.

“When it comes to rewards points, flights usually deliver the best bang for buck, but the reality is a lot of people aren’t thinking about luxurious holidays right now – they’re wondering how they’re going to get through Christmas,” Ms Tindall said.

“For these people, cashing in dormant rewards points could help them make ends meet at what is always an expensive time of year.”

Latest card spending data from Commonwealth Bank shows credit and debit card spending has increased 12 per cent compared with this time last year.

CBA senior economist Kristina Cliffton said recreation spending improved 4 per cent over the period, primarily due to easing border restrictions that are allowing domestic travel to resume.

“We have seen a lift in spending over the past couple of weeks, and we are putting that down largely to Victoria and the winding back of restrictions,” Ms Cliffton said.

“We are seeing recreation spending across a few different states picking up.”

CBA’s card data also noted out-of-the-home food and alcohol spending had risen sharply over the week ending November 20.

Ms Tindall said the pandemic and the subdued ability to travel should prompt people to reassess the need of their reward credit cards, which usually attract higher fees.

“Times have changed, people’s lifestyles have changed, and you might find your card is burning a hole in your pocket instead of leaving you ahead,” she said.

“Look back on how much you paid in annual fees and interest in the last year and what you got back in return in perks.”