What is the break even point of a credit card?

Hi there,

I am a total newbie trying to get into the points game and looking to get my first credit card. I am a Quantas Frequent Flyer and my primary goal is to save money on my yearly return flight to Europe.

I was looking at the different earn rates and annual fees of several credit cards and was trying to make sense of it, especially how much you need to spend to make up for the annual fee with your earnings. I would like your opinion on the following.

Let’s take the ANZ Frequent Flyer Black Amex as an example. It earns 1.5 Qantas point per $ spent an has an annual fee of $425. When comparing the price of flights in dollars versus points on the Qantas website, 1 point came out being worth almost 1 cent, which means the annual fee is worth 42,500 points. At the given earn rate, that’s $28,333 that must be spent to break even.

Am I correct here? If so, I probably need a less expensive card, because it seems like a lot just to break even. I know it comes with other advantages, like lounge access, but I am mainly after getting points.

Please point out anything that I might be missing here. I’m keen to understand more about all this.


Hi noxew,

It’s a hard one to answer because the points value is subjective. I use most of my points for economy flights from west to east coast and it’s around 18000 points for a $360 flight, that’s about 2 cents per point. Business seats are $2000 to buy or only 36000 points which means they are 5.5 cents per point which is incredibly good value but for two of us would simply chew up too many points so it’s cattle class for 4.5 hours :frowning:

I had the card you referred to, collected 75000 bonus points, collected 2 complimentary lounge passes etc, used the cards until I’d collected as many Qantas FF points that I wanted then switched to concentrating on Velocity points because they offer more reward seats for my needs. Prior to the annual renewal date, I closed the said account and avoided the annual fee. I used that account for all of my expenses until I reached my goal and I believe that’s the key to the points game. Achieve the goal then set a new one. I think everyone’s a winner including the banks.


It’s not possible for me to comment on suitability of specific cards for you, but I appreciate you adding the example and showing your workings and thought process.

That’s a perfectly valid methodology to take when it comes to assessing annual fees vs points earn. I’d suggest having a look around, including at the cards overview table, to get a feel for the highest earning points cards, at your spend level, with an appropriate annual fee, and with benefits that you actually value highly to help offset the fee.

I’ll build a calculator to help with this one day!

I like this question, break even point is an interesting concept.

I have the Qantas American Express card but I travel a great deal internationally and I can easily tip 3-4k on it each month, even with my company and our various customers paying my biggest bills like accommodation.  On top of that, long suffering partner is exceptionally disciplined at making sure she adds more for our home spend.  $60,000 a year on that one card is not uncommon for me.

The point above is valid - what are you actually trying to achieve - economy flight to Europe?  Upgrade to business or premium economy?

In the whole debate (newspaper sometimes print an article about how chasing points using cards is just not worth it) they miss a lot; the value of points for upgrading, the after-tax benefit of points and the fact that damn it, you have to have a credit card anyway - or in my case because of my varied itineraries, two or three.