When Should You Pay A Credit Card Surcharge To Earn Points?

Firstly, the RBA rule, imo, is the most unfortunately thing that had happened to the Australian frequent flyer world in the last few years. This has resulted all of the non-Amex cards to cut point earn. The worst hit is Citiprestige Visa card, still with a hefty A$700 annual fee, the point earn has gone from a once lucrative 1.33 KF ppd to a mear 0.4 KF ppd. That's a massive 70% devaluation.

It did limit the amount of fee airline can charge, but it can never beat the Chinese brain. Our local Chinese eatery has changed from 3% surcharge to raise the price on every item, but offered 3% discount if you pay cash.

I didn't mind whether airline charged me 10% surcharge or not at all, as I can avoid that by simply purchase my tickets via Amex online travel, which waives Amex fee.

Anyway, the other factor you need to consider, not just for the point earn, is that many credit card requires you to pay for the airticket using their card to activate the travel insurance. That in itself could be well worth >$100

Don’t forget the travel protection benefits of certain cards which would be a no-brainer for me.

Hey James,

For Qantas the fees vary depending on international or domestic/ trans-Tasman fares

You mention $11 being the cap, but a $1000 fare is more like an international fare where the cap becomes $70

@Michael Kao that 3% discount for cash can be taken as a surcharge, if you find it wrong then contact the ACCC, they might be able to help you there

I was just having a similar debate with myself... was it worth a 2.75%charge to get points for my child’s college tuition?? It would’ve been AA points, Chase Sapphire Reserve or Marriott. Any thoughts?

Most premium credit cards in Canada come with travel insurance including trip cancellation and interruption, flight delays and cancellations, lost and delayed baggage, so I'm willing to pay premium to pay by that credit card. Besides, in the event airlines go bankrupt, which in Canada it can happen overnight without much warning (jetsgo, Canada 3000, etc), so I feel my purchases by credit cards are much more protected, than gift cards, PayPal, etc. I'd pay to carriers like Alitalia only with my credit card.

Those 2 points are much more important than the opportunity to earn points with credit cards.

Isn’t the use of a credit card also useful to defer payment? If you play well enough with billing cycles, you should come out ahead most of the times.

Value of Qantas points?

I'd put these as less than American Airlines points. AA lets you hold an award reservation, change it relatively easily at little cost (depending on when) and the award availability is quite good. Qantas charges for changes, does not let you hold a reservation and availability is quite poor.

That's to say AUD 1.3c for Qantas points valuation sounds fair. USD 1.3c valuation (AA equivalent) sounds overvalued to me.

Qantas points are quite difficult to spend; redeeming on QF or EK the fuel surcharges/taxes become prohibitive; availability is limited. The better value is on CX, AA, IB, making stitching together RTW itineraries easier and more affordable.
It only makes sense, from my perspective, to use them for J or F tickets ( and 2 cents AUD is reasonable); economy or domestic the return is much, much lower.
The way in which the banks behaved over CC surcharges was completely scandalous; unfortunately the current Royal Commission into Banks and Financial Institutions has unearthed behaviours and scandals so egregious that those surcharges pale into insignificance. Expect to see a few bankers go to jail, and many , many more lose their sinecures and jobs. Looking forward to it ; it couldn't happen to a more miserable bunch of bastards.

Another thing some credit cards get you 1 or 2 checked bags free and for others in group. That alone can save many $$

I am not sure if this applies in OZ

Thankfully credit card surcharges are still fairly rare here in the US, with the exception of tax payments and gas stations (mostly on the West Coast). It's really a pretty simple math exercise - does the value of the rewards earned exceed the fee or not.

In the odd circumstance where I have to purchase flights on a foreign airline website that charges CC fees (and yes, I have had to do that a couple of times), I'll usually suck up the fee because I place a higher value on the travel insurance than the cost of the fee. Granted the insurance benefits seem to be specific to US-issued cards.

It is a very simple calculation - How much can you redeem the points for vs how much is the fee?
The monetary value of the points is not relevant.
For example, if you earn 3 points per dollar and can redeem for a 50% bonus, that means 4.5 points per dollar and if the transaction requires you to pay 2.25% then it would certainly make sense to charge. It depends if the value of points outweighs the fee.