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 02 February 2021
American Express Qantas Ultimate Card
Receive 100,000 bonus Qantas Points plus $200 back when you apply by 2 February 2021, are approved and spend $3,000 within 3 months of Card Membership. Available to new Card Members only. Mozo Experts Choice Qantas Frequent Flyer Premium Credit Card Winner 2020^. T&C’s apply
Qantas Frequent Flyer
$450
100,000
1.25 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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1.25 points per dollar on Amex, uncapped
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Never
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100,000
-
-
8,000 points
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110,400 points
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18,770 points
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-
• Travel Insurance
• Purchase Protection
• Account alerts by SMS
Read our Mozo Review to learn more about the Qantas Ultimate Card
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St.George Amplify Signature
Earn up to 200,000 Bonus Amplify Rewards Points over 2 years (130k yr 1, 70k yr 2) when you spend $12k on eligible purchases each year. $139 reduced first year annual card fee (normally $279). New cards only, Eligibility criteria and T&Cs apply. Offer ends February 9th 2021.
Amplify Rewards
$279 $139 in the first year
200,000
1.5 points uncapped
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-
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19.74% p.a.
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0% p.a. for 6 months and then 21.49% p.a.
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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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-
-
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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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Suncorp Clear Options Platinum
Receive 100,000 bonus Suncorp Credit Card Rewards Points when you spend $3,000 on Eligible Transactions in the first 90 days from approval (T&Cs apply). Be rewarded for your purchases and enjoy premium benefits such as complimentary insurances.
Suncorp Rewards
$129
100,000
1.25 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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21.99% p.a.
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55
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3.40%
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$30.00
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1.25 points per dollar on Visa, uncapped
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Never
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100,000
-
-
19,500 points
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299,000 points
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20,900 points
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• Concierge
• Travel Insurance
• Extended Warranty
• Purchase Protection
• Guaranteed Pricing
Read our Mozo Review to learn more about the Clear Options Platinum
Details Close
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Apply By 02 February 2021
American Express Qantas Premium Card
Receive 80,000 bonus Qantas Points plus $200 back when you apply by 2 February 2021, are approved and spend $3,000 within 3 months of Card Membership. Available to new Card Members only. Credit Card Provider of the Year in the Mozo Experts Choice Awards 2020^.
Qantas Frequent Flyer
$249
80,000
1 point uncapped
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-
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20.74% p.a.
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No current offer
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44
-
3.00%
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$30.00
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1 point per dollar on Amex, uncapped
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Never
-
80,000
-
-
8,000 points
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110,400 points
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18,770 points
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-
• Travel Insurance
• Purchase Protection
• Account alerts by SMS
Read our Mozo Review to learn more about the Qantas Premium Card
Details Close
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Apply By 24 February 2021
Qantas Money Qantas Premier Platinum
0% p.a. for 18 months on Balance Transfers, reverts to cash advance rate thereafter. Earn up to 100,000 bonus Qantas Points when spending $4,000 or more on eligible purchases (T&Cs apply).
Qantas Frequent Flyer
$299 $199 in the first year
100,000
1 point up to $10,000/month, then
0.5 points uncapped-
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19.99% p.a.
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0% p.a. for 18 months and then 21.99% p.a. (1.00% balance transfer fee)
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21.99% p.a.
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55
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3.00%
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$30.00
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1 point per dollar on Mastercard, up to $10,000 per month, then
0.5 points per dollar on Mastercard, uncapped -
Never
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100,000
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-
8,000 points
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-
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18,770 points
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• Concierge
• Travel Insurance
Read our Mozo Review to learn more about the Qantas Premier Platinum
Details Close
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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.
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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.
