Frequent flyer points: how Australians can start earning

Frequent flyer points are what an airline loyalty program pays you for flying and for spending with its partners. You can swap them for flights, upgrades and other rewards. In Australia, Qantas runs Qantas Frequent Flyer and Virgin Australia runs Velocity Frequent Flyer.

Sources for this section: Velocity, About Velocity; Qantas, Status Credits.

The two main programs

Qantas Frequent Flyer launched in 1987 with 50,000 members and had 10 million by June 2014. Qantas dates its Bronze, Silver, Gold and Platinum tiers to 2001 and its top tier, Platinum One, to 2011.

Velocity began in 2005. Virgin Australia relaunched it in August 2011 with a new Platinum tier, and Velocity reached 4 million members in February 2014.

Joining Velocity is free. Qantas says a joining fee may apply, and a May 2015 Qantas release gave the normal fee as $89.50.

You can join both, but each flight earns points in one program only. Pick the airline you fly most and collect your points there.

Sources for this section: Qantas News Room, 10 million members; Virgin Australia, four million members; Australian Aviation, Velocity relaunch; Velocity, About Velocity; Qantas, Earning Points with Qantas and Jetstar; Qantas News Room, Joey Club launch; Velocity, Claim Missing Points for flights; Qantas, Terms and Conditions.

How you earn points

In the air, travel on Qantas and Jetstar from 1 July 2014 earns points based on where you fly, the fare you pay and the airline you choose. Before then, Qantas based points on the miles flown. In the Qantas table for long flights within Australia, a Red e-Deal (discount economy) fare earns 1,450 points one way. A Flex (flexible economy) fare on the same route earns 2,200. Both figures are before any tier bonus.

On Virgin Australia domestic flights, Velocity pays 5 points for every dollar you spend on an eligible fare, before any tier bonus. On Virgin Australia international flights, and on domestic flights that are part of an international journey, Velocity points depend on your fare class and the miles flown. Both programs also pay points on partner airlines.

On the ground, partners pay points when you spend. Qantas lists partners such as banks, online shops, hotels, car hire, restaurants, health insurance and energy. Velocity's Earn menu lists areas such as fuel, car hire, hotels, dining, its eStore (online shops) and credit cards.

Quote your membership number when you book or spend. If you join after a trip, both programs let you claim eligible flights taken up to 30 days before you joined.

Sources for this section: Qantas, Program Changes FAQ; Qantas, Airline Earning Tables; Velocity, Earning Points; Qantas, Earning Qantas Points; Velocity, Earn; Qantas, Terms and Conditions; Velocity, Claim Missing Points for flights.

Points and status credits are different

Points are what you spend. Status credits, plus a minimum number of flights, decide your tier, and both programs keep status credits separate from points.

Qantas has four tiers above Bronze, its entry level: Silver, Gold, Platinum and Platinum One. Velocity has three above Red: Silver, Gold and Platinum.

To reach Silver on Qantas, you need 300 status credits in a membership year. That is 12 months, starting the month after the month you joined, so April to March if you joined in March. Gold takes 700 and Platinum 1,400. You must also take at least four eligible Qantas, QantasLink or Jetstar flights in that year. Members who already hold Silver, Gold or Platinum need fewer credits to keep it.

On Velocity, status is counted over the past 365 days. Silver takes 250 status credits and 2 eligible flights with a VA flight number, Gold 500 and 4, and Platinum 1,000 and 8.

Higher tiers earn bonus points on flights. On Qantas and Jetstar flights, Qantas adds 50% for Silver, 75% for Gold and 100% for Platinum and Platinum One. The tiers can also bring perks such as priority check-in and, from Gold up, lounge access.

A long Qantas domestic flight on a Red e-Deal fare earns 20 status credits one way, so Qantas Silver takes 15 such flights in one membership year. If you fly a few times a year, focus on points and treat status as a bonus.

Sources for this section: Qantas, Status Credits; Qantas, Terms and Conditions; Velocity, Terms and Conditions; Velocity, About Velocity; Qantas, Earning Points with Qantas and Jetstar; Velocity, Earning Points; Qantas, Airline Earning Tables.

When points expire

Qantas points expire if you go 18 months without earning points or status credits or redeeming points, and family transfers do not count. The 18-month limit began on 1 July 2010. Before then the limit was three years.

Velocity allows longer. Its points expire after 36 months with no earning, redeeming or transferring. Members of a family pool, where family members combine points in one account, are exempt.

Sources for this section: Qantas, Program update: Points Expiry; Qantas, Terms and Conditions; Velocity, Terms and Conditions.

When a credit card helps

Qantas says all major banks offer cards that earn Qantas Points. Velocity names three partners that issue Velocity co-branded cards, which load points into your Velocity account each month: Virgin Money, American Express and NAB. Velocity also takes points moved over from other card rewards programs, such as Westpac Altitude, Commonwealth Awards and American Express Membership Rewards.

The rates differ. As at 1 September 2015, Velocity listed 2 Altitude points as 1 Velocity point, and 2.5 Commonwealth Awards points as 1.

ASIC's MoneySmart site says reward cards tend to have higher interest rates and fees. It calls reward programs great if you use your card a lot, but says you should pay the balance off in full within the interest-free period. It adds that if you carry a significant balance from month to month, you'll lose more in interest and fees than you gain in rewards.

MoneySmart also asks whether you would have to buy things you do not need just to earn the rewards. This is general information, not financial advice. Read the card terms before you apply.

Sources for this section: Qantas, Earning Qantas Points; Velocity, Frequent Flyer credit cards; Velocity, Transfer credit card points; ASIC MoneySmart, Reward schemes.

A simple plan to start

1. Choose the airline you fly most.
2. Join its program and add your number to every booking.
3. Quote your number with everyday partners, such as shops and hotels, so spending earns too.
4. Learn the status credit target for the tier you want before you chase it.
5. Earn or redeem points at least once a year so they do not expire.

Rules and earning rates change from time to time, so check the program's official pages before you book.