Credit card rewards schemes devalued as interchange fee changes come into effect
20 Jun 2017
Key points
RBA regulations capping interchange fees at 0.8% come into effect July 1
Reduced profits for banks mean spenders will see rewards value drop
Lower earn rates, stricter points caps and higher annual fees all on the cards
With the RBA’s interchange fee regulations set to come into effect on July 1, the value of credit card rewards schemes may be about to tank.
In May 2016, the RBA announced new regulations which capped interchange fees charged on Australian-issued Visa and Mastercard credit cards at 0.8%, and which are about to come into effect on July 1 2017.
While this is good news for merchants - who will no longer pay hefty fees for accepting credit cards over the counter - it means banks make less profit from credit card transactions. The likely remedy to what could be a blow to the banks’ bottom lines? Reduced value on rewards credit cards.
A number of major players, including all four big banks, began to slash the value of their rewards schemes after the RBA’s changes were announced. Now, as the July 1 deadline looms, we’re likely to see more credit card providers follow suit.
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Rates updated daily. Advertiser disclosure.
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Apply By 07 September 2021
Westpac Altitude Platinum
Earn up to 80,000 bonus Altitude Points ($3k min. spend in the first 90 days on eligible purchases). Enjoy up to 45 days interest free with a 0% balance transfer for 18 months (rate then reverts to 21.49% after). 1% BT fee. Only $99 annual card fee for the first year, $150 thereafter.
Altitude Rewards
$150 $99 in the first year
80,000
1 point uncapped
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-
-
20.49% p.a.
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0% p.a. for 18 months and then 21.49% p.a. (1.00% balance transfer fee)
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21.49% p.a.
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45
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3.00%
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$15.00
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1 point per dollar on Mastercard, uncapped
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Never
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80,000
-
-
15,600 points
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212,000 points
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24,100 points
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• Travel Insurance
• Extended Warranty
• Purchase Protection
Read our Mozo Review to learn more about the Altitude Platinum
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American Express Qantas Discovery Card
Receive up to 1.75 Qantas Points for every $1 spent on Card purchases (T&Cs apply). No annual fee for the life of the card. T&C’s apply. Mozo Experts Choice Qantas Frequent Flyer Credit Card Winner 2020.
Qantas Frequent Flyer
$0
No current offer
0.75 points uncapped
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-
-
20.74% p.a.
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No current offer
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44
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3.00%
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$30.00
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0.75 points per dollar on Amex, uncapped
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Never
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No current offer
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8,000 points
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110,400 points
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19,730 points
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• Purchase Protection
• Account alerts by SMS
Read our Mozo Review to learn more about the Qantas Discovery Card
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NAB Qantas Rewards Signature Card
NABs fastest way to earn Qantas Points. 110,000 bonus Qantas Points when you spend $3,000 on everyday purchases within 60 days of account opening and keep the card open for 12 months. Access to 6 complimentary insurances when you make eligible purchases.
Qantas Frequent Flyer
$395 $295 in the first year
110,000
1 point up to $5,000/month, then
0.5 points up to $20,000/month-
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19.99% p.a.
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0% p.a. for 6 months and then 21.74% p.a. (2.00% balance transfer fee)
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21.74% p.a.
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44
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3.00%
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$15.00
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1 point per dollar on Visa, up to $5,000 per month, then
0.5 points per dollar on Visa, up to $20,000 per month -
Never
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110,000
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8,000 points
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110,400 points
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19,730 points
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• Concierge
• Extended Warranty
• Purchase Protection
• International Travel Insurance
• Transit Accident Insurance
• Interstate Flight Inconvenience Insurance
• Rental Vehicle Excess in Australia Insurance
Read our Mozo Review to learn more about the Qantas Rewards Signature Card
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Apply By 03 May 2021
American Express Explorer® Credit Card
Receive 90,000 Bonus Membership Rewards Points and get $300 back when you apply online by 3 May 2021, are approved and spend $3,000 on your new Card within the first 3 months. T&Cs apply. New Card Members only.
Membership Rewards
$395
90,000
2 points uncapped
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-
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20.74% p.a.
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No current offer
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55
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3.00%
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$30.00
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2 points per dollar on Amex, uncapped
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Never
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90,000
-
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15,600 points
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212,000 points
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20,000 points
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• Travel Insurance
• Extended Warranty
• Purchase Protection
• Account alerts by SMS
Read our Mozo Review to learn more about the Explorer® Credit Card
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St.George Amplify Signature
Earn up to 200,000 Bonus Amplify Rewards Points over 2 years (100k yr 1, 100k yr 2) when you spend $12k on eligible purchases each year. New cards only, Eligibility criteria and T&Cs apply. Offer ends 28th September 2021.
Amplify Rewards
$279
200,000
1.5 points uncapped
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19.74% p.a.
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0% p.a. for 15 months and then 21.49% p.a. (1.00% balance transfer fee)
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21.49% p.a.
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55
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3.00%
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$15.00
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1.5 points per dollar on Visa, uncapped
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Never
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200,000
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15,600 points
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212,000 points
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22,200 points
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• Concierge
• Travel Insurance
• Extended Warranty
• Purchase Protection
• Guaranteed Pricing
• Rental Car Excess Cover
Read our Mozo Review to learn more about the Amplify Signature
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^See information about the Mozo Experts Choice Credit cards Awards
Mozo Data Manager, Peter Marshall, said there are three main ways banks will be likely to recoup the lost profits from interchange fees; reducing points earn rates, introducing stricter caps and expiry dates on points, and hiking annual fees.
Reducing the amount of points earned per dollar is one of the more common strategies. Credit card giant Citi dropped the earn rate on five of its cards, while CommBank, NAB and Westpac reduced the earn rate on AMEX companion cards - by up to 2.5 points per dollar spent, in one case.
“Spenders who rely on their AMEX companion card to bump up their rewards earn have been left out in the cold a bit, but on the other hand, cards issued directly by AMEX were some of the only options that saw points earn rates increase this year,” Marshall said.
RELATED: Credit card providers shaking up the way you pay with interest free offers
ANZ also scaled back its rewards program considerably, ditching AMEX companion cards all together and introducing new points caps and tiered earning.
For example, the ANZ Rewards card used to earn cardholders 1.5 points per dollar on AMEX and 0.75 points per dollar on Visa, uncapped. Now, the AMEX companion card is no more, and shoppers can earn 1 point per dollar on Visa, up to $1,000 per month, and 0.5 points per dollar on spends after that threshold.
Suncorp and Virgin Money also introduced lower points caps. Suncorp capped points on its Clear Options Platinum Qantas card at $8,000 a month, while Virgin Money Velocity High Flyer cardholders will now earn 1 point per dollar up to $8,000 per month, down from a cap of $10,000 per month (still with an earn rate of 0.5 points per dollar afterward).
“Points caps and tiered earn rates like this mean cardholders need to be aware of how much they spend each month. If you usually spend under the monthly threshold, then it might not bother you. But if you’re a big spender, the fact that you’ll be losing out on rewards value on a portion of your spend each month is something to consider,” said Marshall.
RELATED: New Qantas rewards credit card: all you need to know about points, fees and bonuses
The annual fee was also adjusted on 14 credit cards this year and of those, 8 were increases while in 6 cases the fee was reduced.
“Some card providers may be raising annual fees to make up for lowered interchange profits, but it’s by no means a market-wide trend,” said Marshall.
“The thing to keep an eye on is whether you’re paying a higher annual fee while receiving the same or lesser value from your card. If so, it might be time to look for a new card.”
Want better value from your plastic? Make sure you’re carrying a rewards card that will net you the best bang for your buck by comparing options using our Rewards Revealer tool.
