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Wednesday, 20 June 2018

Money for nothing, and flights for free

Like many people I like to get something for nothing, so the chance to get enough free 'frequent flyer' points to 'pay' for round trips from Australia to New Zealand for a ski trip for myself and DW was quite attractive. So, last April I Googled "QFF bonus points no annual fee" to see what credit cards were currently offering a) a sizable number of 'bonus points' for obtaining a new credit card and simply using it for my normal monthly expenses, and b) would not cost me anything (no annual card fee for the first year).

The card I decided on was the 'ANZ Frequent Flyer Black' card. The card was offering 75,000 'bonus' points if you got the card and made $2,500 of purchases using the card within the first three months. As I normally put about $2000+ per month on my credit card (for standard expenses such as groceries, utility bill payments, petrol etc.) and pay the amount due in full each month, it would be no trouble simply putting those charges on a different card for a couple of months. The online application took about five minutes to fill in, and, because I included some investment income (dividends) in the financial details, I received a phone call a few days later asking for evidence of the dividend income I'd listed. I simply had to send a pdf statement of the past 12 months worth of dividend payments, sourced from the two share registries that do the admin for most Australia shares.

The card arrived a week or so later, and, as expected, I easily met the required 'spend' amount within the first two months. Now that the 75,000 QFF points have been 'statemented' I just have to wait until they get transferred to my QFF account, and then I'll phone up to cancel that credit card. Meanwhile, since I've met the required spend amount, I've switched back to using my normal credit card.

The 75,000 points will be sufficient to 'buy' two round-trip economy class seats from Sydney-Christchurch (they currently are listed at 36,000). And it cost nothing. Well, almost. I did manage to forget to pay the first monthly statement by the due date (my normal credit card bill gets paid automatically via direct debit from one of my savings accounts), so I ended up paying about $30 in interest. Still, overall it is a very cheap way to fly from Australia to New Zealand!

Once I've cancelled that card I *might* do a similar thing with a credit card from another bank, although at the moment the best offer I can find is 'only' for 40,000 QFF points. Once the ANZ account has been closed for at least 12 months, I could apply for a similar offer as a 'new' ANZ customer again, although it seems slightly unethical.

Aside from costing me a few dollars when I forgot to make the monthly payment (in full) on time, the only 'downside' of this technique is a potential 'hit' to ones credit score. So, if you are about to apply for a major loan (eg. a home loan), then this probably isn't a good idea. And if you don't have a good credit score, you probably won't get approved for such a card anyhow. Also, unless you are used to charging your expenses to a credit card and paying off the balance IN FULL each month, it would be highly inadvisable to start using a credit card just to qualify for some frequent flyer points. Another thing to look out for is any 'service fee' that may be added to bills paid using a credit card (for example, some utility bills add 1% or more to your bill amount if you pay using a credit card). Similarly, Coles and Woolworths don't apply any 'surcharge' for paying for groceries using a credit card, whereas Aldi adds on a small charge for making payment via credit card.

Another thing to watch out for is cancelling your card too soon - before the FF points have actually been transferred into your FF account - such transfers are usually only processed when the following monthly statement gets processed. So, if you pay off and cancel your credit card as soon as the FF points appear in your online transaction listing, they may never arrive in your FF account.

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