Are Points Worth the Surcharge?
One of the most common questions we hear: "Should I pay the credit card surcharge to earn points, or use EFTPOS/cash?"
The answer isn't always obvious - but Points Buddy's Optimal Pay feature makes it instant.
Understanding Credit Card Surcharges
Many merchants charge a surcharge when you pay with a credit card:
- •Visa/Mastercard: Often 0.5% - 1.5%
- •American Express: Often 1.5% - 3%
These surcharges can quickly eat into the value of the points you're earning.
The Calculation Challenge
To determine if points are worth the surcharge, you need to:
- •Calculate the surcharge amount
- •Calculate the dollar value of points earned
- •Compare the two
- •Factor in your personal point valuation
This math gets complicated fast, especially when standing at a checkout.
How Points Buddy's Optimal Pay Feature Helps
Our Optimal Pay feature does all this calculation instantly:
- •Enter your payment options (Visa, Mastercard, Amex, EFTPOS, cash)
- •Add points earned for each card type
- •Include surcharge rates for each payment method
- •Get instant recommendation on the best payment method
The app shows you exactly which payment method gives you the best net value after accounting for both points earned and surcharges paid.
Real-World Example
Let's say you're making a $100 purchase:
- •
Amex: Earns 150 points (worth $3.00)* but has 2% surcharge ($2.00)
- •Net value: $1.00
- •
Visa: Earns 100 points (worth $2.00)* but has 0.5% surcharge ($0.50)
- •Net value: $1.50
- •
EFTPOS: No points, no surcharge
- •Net value: $0.00
In this case, Visa is actually the best option! Despite the Amex earning more points, Visa gives you the best value once you take into account the surcharge (Total net value of $1.50 compared to Amex's $1.00).
*This calculation assumes that your point value is 2.0c per point. We will soon produce a guide regarding point valuations.
When Surcharges Are Worth It
Surcharges can be worth it when:
- •You're earning bonus points (3-4x points per dollar)
- •You value your points highly
- •The surcharge is low (under 1%)
- •You're working toward a specific redemption goal
The Bottom Line
Don't assume earning points is always better than avoiding a surcharge. Do the math - or let Points Buddy do it for you.
Ready to make smarter payment decisions? Download Points Buddy and try the Optimal Pay feature today.