Is the Virgin Flyer Credit Card Worth it?

The Virgin Flyer credit card is one of the newest cards to be launched onto the Australian market and its designed to keep the big banks honest. But we wanted to ask – is it worth it?

Richard Branson’s new credit card a frequent flyer card that earns 1 Velocity Point per $1 spent up to a cap of $1,500 per month and then the points earning ratio drops down to 1 Velocity Point for every $2 spent.

Financially, at the time of posting this blog post the interest rate on purchases is 20.99% and you can balance transfer from your existing credit card onto the Virgin Flyer credit card for 6 months at a rate of 6.9% p.a. Oh and the annual fee is just $99 per year – which is actually on the cheaper end of the market with other cards in its category.

Now here comes the big sweetener! If you sign up for the card and then buy a seat on Virgin Blue using your new card, Virgin will give you a second seat for free. This 2-for-1 deal can be used up to 4 times per year including on the Blue Saver airfares.

We wanted to put the card to the test, do some investigation for the Credit Letter readers and find out which scenario is best?

Test: Fly to Cairns

source

Lets escape the winter blues and fly two adults from Newcastle to Cairns flying out Sep 16th and return home 4 days later on Sep 20th. We’ll test Virgin Blue against Jetstar flying at comparable times of the day.

A) Fly with Virgin Blue using the new Virgin Flyer card to book with online:

$994 inc all taxes + credit card surcharge
- 50% because of the 2-for-1 deal
= $497
+ $99 Virgin Flyer credit card annual fee
= $596

B) Fly with Jetstar without signing up for any new credit card:
=$904 inc all taxes, seating fees and surcharges

Result: Even with the Virgin Flyer’s annual fee the deal is worth it! You’ll get the flights to Cairns for around $300 cheaper! That’s a huge 34% cheaper even after you pay for the extras.

Quick tips for people considering applying for a frequent flyer credit card:

• Only apply for a frequent flyer credit card if you intend on flying sometime soon. Points earned can expire if your frequent flyer program account goes inactive for long period (3 years for Velocity and 18 months for Qantas).
• Make sure you remember to always pay off your balance each month otherwise the interest paid on outstanding balances plus the annual fee will make it unprofitable
• Choose a card that will earn you points on the airline you want to fly with.
• Think about your destination. Ensure that the frequent flyer program with which your credit card is linked with, can fly you there.
• If you intend on racking up massive points like from Up in the Air then make sure your points won’t be capped
• Direct earn frequent flyer credit cards like the Virgin Flyer are much more straight forward than general ‘rewards credit cards’. This is because points earned on the credit card get transferred to your frequent flyer program automatically.

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