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Saturday, 21 February 2009

Some credit card cash-back

One of the oldest credit card 'rewards' schemes in Australia is FlyBuys. I've been a member since the program started, and it's always nice to redeem some of the accumulated points for a credit onto my credit card account. My latest FlyBuys. statement showed that some of the points balance had been accumulated three years ago, and would therefore expire at the end of February. So yesterday I used most of my points balance to claim a $450 credit onto my CC account. It was interesting that the reward confirmation screen advised that you should 'consult your tax advisor' to check if the value of the reward was taxable income. A quick check of the tax office website shows that such CC rewards are not taxable. That's not really surprising - if the value of the reward accumulated by using the CC was taxable, then the annual fee and interest charges would also be deductible expenses. The last thing the ATO wants is for consumers who 'earn' $100 worth of rewards points to be able to write-off hundreds of dollars of credit card interest!

I'll be earning fewer FlyBuys. points from now on - the points rate has been decreased from 2 points per dollar to only 1 point per dollar for spending on my National Visa CC, and I'm also using the CC for fewer bill payments since the RBA changed the rules and allowed service providers to "pass on" merchant CC fees. These days you have to check the fine print of any utility bill to confirm if there is a 1% or more fee for making payment via CC.

BankWest sent me a special offer for using my BankWest Zero CC during February, March and April. If I use that CC for at least $500 spending each month I'll be given a $30 credit. That works out to be 2% "cash-back" on that card, compared to the approximately 0.2% value of FlyBuys. points, so for the next three months I'll be using my BankWest CC for at least $500 of my usual bill payments and grocery shopping each month.

As I pay off my CC balances in full each month, none of these CC rewards schemes cost me anything (aside for a low annual account fee for a couple of my CC accounts).

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