If you’re a points collector and you’re thinking of buying yourself the latest phone, you might be wondering… ‘how should I buy it for the best rewards – gift cards or credit cards?’
To maximise your points intake when making a big purchase, there are different ways to approach it. The two most popular methods are purchasing directly with a points-earning credit card or using gift cards during a bonus points promotion. Which is better? Let’s take a look.
1. Buying directly on a credit card
The most straightforward way to earn points is to use your existing (or a new) points-earning credit card. You’ll earn points per dollar spent and can also take advantage of some card perks.
But whilst it is convenient, it’s also not the highest way to maximise your earnings.
Pros of using a credit card
- One of the easiest ways to earn points without the extra hassle
- Could contribute greatly to your sign-up bonus requirements if the card is new
- Can be fee-free at certain retailers (e.g. using Amex at JB Hi-Fi)
- Could be eligible for price and/or screen insurance through specific credit cards
- Interest-free periods could help with cash flow and keep your cash in the bank for longer
Cons of using a credit card
- Not everyone can take out a points-earning credit card
- Not as points-effective compared to gift cards
- Potential for late fees/interest charges if you don’t pay the balance off in time
2. Buying via gift cards
Coles and Woolworths often run weekly bonus points specials on gift cards, including those that can be used on mobile phones. Popular options include Apple gift cards, which can be directly used to buy iPhones.
Third-party card networks such as TCN and Ultimate often have bonuses on gift cards that can be used at some major retailers, such as JB Hi-Fi. This could enable you to buy a wider range of phones, including Samsung devices.
Pros of using gift cards
- Generally offers the highest earn rate (usually equivalent to 10 Qantas or Velocity Points per dollar)
- Also have a credit card? Double dip rewards by buying gift cards on your points-earning credit card. You could earn both credit card points and bonus points on gift cards.
Cons of using gift cards
- You’ll have to wait for a specific promotion (could take several weeks or more)
- More hassle than directly using a credit card
- May need to buy multiple gift cards and redeem them all when purchasing
- Could be a hassle if you needed to refund the phone later
- Higher risk of fraud or other issues affecting your gift cards
How about buying a gift card… via a gift card
Generally, gift cards purchased at the supermarket can’t be used to buy further gift cards. However, there is one exception. Visa, Mastercard and eftpos-branded prepaid gift cards can usually be used at any merchant that accepts those card networks – including at Coles and Woolworths.
As these are used as a form of payment via the card terminal, rather than a traditional store gift card that’s scanned before payment, they usually work if you want to stack the purchase of gift cards.
For example, Coles occasionally offers 2,000 bonus points on $100 and $250 prepaid Mastercard gift cards. If you bought 6x $250 cards (five on one account and one on another), that would be 12,000 bonus Flybuys points at a cost of $35, as each card has a $7 activation fee.
Those cards could then later be used to buy Apple or other store gift cards to purchase your phone – make sure there’s also a 20x bonus points offer on those cards too.
Note: You would earn significantly more by buying 15x $100 cards under this promo, netting 30,000 bonus Flybuys points for a cost of $75 in fees ($5/card). However, stock for these cards is usually very limited, and with the purchase cap of 5 cards/account, it would also be difficult to reach the full total needed.
Summing Up
For many, using their credit card can seem like an easier way to purchase a phone and earn extra bonus points. It’s less of a hassle, but the trade-off is you won’t be maximising the points on offer.
Gift card bonuses generally offer the highest return on your purchase, so naturally, using a points-earning credit card to buy gift cards unlocks the best of both worlds. ‘Triple stacking’ a prepaid Visa/Mastercard/eftpos gift card would further increase your earnings. But these methods also add extra layers of complexity, which you should consider.
A case scenario
To put the rewards potential in real-world terms, say you spent $1,500 on a new phone:
- If you wanted to ‘triple-stack’ and buy the Coles prepaid Mastercard with a 2,000 bonus points offer, you could earn 12,000-30,000 Flybuys points with $1,500 worth of cards. Note that a $5 or $7/card fee applies, and usually, you can earn points on up to five cards per promo, so you would need multiple accounts or promo periods to get the full amount. Those points could be worth 6,000 to 15,000 Velocity Points.
- With a 20x bonus offer on Apple or other store gift cards at the supermarket, you’re effectively earning 10 Qantas or Velocity Points per dollar. That’s 15,000 points.
- If you also had a credit card earning one point per dollar, that’s another 1,500 points for buying the gift cards, for a total of 16,500 Qantas or Velocity Points, plus the 6,000-15,000 extra Velocity Points from triple stacking the prepaid Mastercard gift cards.
That’s already enough for return Economy reward flights on short routes, or it can go a long way to your next international Business Class treat. It’s worth doing some further research before making your purchase to find the option that works best for you.
While the triple-stacking method does yield the highest amount of points, it’s also significantly more effort. For the average user, even just using the latter two methods for 16,500 airline points on a $1,500 spend is still a decent return. In the case of Apple gift cards, where you can usually earn points on the variable-load cards, it’s also a relatively simple trip to the supermarket for those points.
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