Discounted flights, upgrades, swanky hotels, and cheap wine — there are few people who would say no to a little something-for-nothing right now.

But for young Australians, the pursuit of free stuff might actually be costing quite a bit. 

A study by consumer research group Canstar of 3,070 respondents found more than half of people aged 18 to 29 with a credit card sign up solely to earn travel rewards points.

However, this is also the group most likely to fall behind on repayments, with nearly two-thirds failing to pay off their debt each month.

The trend continues with those in their 30s, where about 67 per cent of cardholders use them for travel rewards, and again, roughly 63 per cent struggle to clear their balances.

Travel rewards cards often come with high interest rates, starting at about 20 per cent and reaching as high as 27.99 per cent.

And with complex terms and conditions that can change at any time, the odds are “stacked against young people”, according to Rochelle Harmer, a financial counsellor for the National Debt Helpline in NSW.

“People who use them and use them extremely well probably are benefiting from it, but we know that that is not the average person, and some people really get caught by them,” she said.

“The reason these things are offered is because they assist the bank, the lender, in making a profit.

Tiesha Moonen is taking a gap year in 2025, planning to travel through south-east Asia, Europe, and ultimately complete a work placement.

The 23-year-old got a credit card earlier this year to earn points, hoping to accumulate enough for a free trip home.

“I was definitely scared to get a credit card. I didn’t really understand it,” she said.

“But I talked to my dad who explained it to me, and then I read up about them.”

With a $3,000 credit limit, she feels the risk is low and the rewards are worth it. 

The card also provides free travel insurance for her entire trip and lets her use it overseas without incurring transaction fees.

“I think for me, in my situation, it’s worth it because my conditions aren’t very high, and it’s not a lot of money I’m gambling,” she said.

While Ms Moonen has a plan, she admits she hasn’t fully read the terms and conditions of the card but is clear on her commitments and the fees and interest charges she will have to pay if she doesn’t meet them. 

“It’s important to understand what you’re committing to,” she said.

“Obviously, they advertise it in a way that makes it sound really, really amazing, saying you’ll be travelling for free, but that’s not true. You have to spend money to earn the points.”

Cards come pre-loaded with pitfalls

What started as a strategy to fly free ended with 32-year-old regulatory lawyer Lachlan Royal paying hundreds in interest after a confusing policy misunderstanding. 

At one point in the lead up to his wedding, he had eight credit cards on the go in a practise known as ‘points churning’ where people apply for travel reward credit cards and ditch them once they have gathered the bonus points offer.

It worked — he and his wife enjoyed free business class flights on their honeymoon.

But while overseas, when Mr Royal took out a cash advance on his NAB card, a confusing clause about repayments caught him out.

“Knowing that that would attract fees, I immediately transferred cash from my bank account to that account, assuming that it would pay it off,” he said.

He thought the money he put in when he made the advance would be naturally applied to whatever was accruing the most interest first, but that didn’t happen.

“That cash advance had been then accruing interest that entire time,” he said.

“I ended up paying more than it would have been if my statement hadn’t been paid.”

Mr Royal read the terms and conditions of the card before he signed up, and thought he understood the rules.

“It makes me worried about any ordinary person that would be taking these cards up because the information is just not all that accessible.”

Annual fee and high interest rates ‘minefield’ for young people

Earlier this year, several financial providers shortened their interest-free periods for credit card purchases, notifying customers via email.

The terms and conditions on travel cards are often unclear and can change with little notice, Canstar data insights director Sally Tindall said. 

The promise of an interest-free period often entices consumers, but without paying off the balance in full, on some cards new purchases accrue interest from day one. 

Travel rewards cards also come with sky-high annual fees up to $1,200 which are automatically charged unless cancelled. 

There are kickbacks on some of the cards, but they often come with strict terms and conditions. For example, the Qantas American Express Ultimate Card, with an annual fee of $450, comes with a promise of a $450 voucher to spend on flights to offset the cost.

But the voucher can only be spent in one transaction, and only on specific flights.

Ms Tindall said consumers needed to be fastidious in their approach to travel rewards cards and realistic about how much value they can actually claim. 

“It’s one thing to be banking hundreds of thousands of rewards points, and another thing to be actually redeeming them,” she said.

Low and middle-income consumers pay for travel rewards system

Credit card debt is the second most common issue reported to the National Debt Helpline, following mortgage and rental stress.

Ms Harmer said the travel rewards system worked for people who have money, but often burdened those without.

“We speak to many people who find that they’ve lost their job or they didn’t prepare for a few weeks off when things closed down because they’re working casually,” she said.

“Many young people have more than one available credit facility, and often they’ve got credit at a higher rate than they originally thought.”

She said some of the calls she receives were from people who meet their minimum repayments but continued to add to their debt through everyday purchases.

“I ask them how they’re paying for their groceries, and they tell me they’re using the card so they’re not actually reducing their amount of money sitting on that card,” she said.

While the Australian Prudential Regulation Authority (APRA) doesn’t track credit card debt by age or rewards usage, the Reserve Bank reports Australians collectively owe $17.43 billion in personal credit card debt, at an average interest rate of 18.24 per cent. 

In the Canstar study, the age group with the most credit cards, those aged 70 and older, were the least likely to use them for rewards. 

Ms Tindall suggests the trend of declining rewards card use as people age points to a flawed system. 

“I think over time, these kind of rewards programs and freebies, people realise they’re not really cut out as good as they often sound on paper,” she said.

“They’ve probably gone through a number of rounds of playing the rewards game, not getting ahead, and just giving up on it altogether.”

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