In a miserly move reminiscent of Scrooge himself, banks have cut the value of 55% of rewards cards in 2016 according to new research.
A Mozo investigation into rewards programs revealed 64 of 116 cards on offer have become less rewarding, with Mozo Director Kirsty Lamont warning consumers to be wary of changes to their own cards.
“Consumers are enticed by images of island holidays and the prospect of gift cards, but the glossy marketing of rewards credit cards hides the fact that earn rates are reducing and points caps are becoming stingier.”
“Rewards card providers have been hacking away the value of these cards, meaning consumers will have to spend more to get the same rewards or simply accept they are getting worse value than they signed up for,” she said.
Regulatory changes imposed by the Reserve Bank earlier this year to cap exorbitant credit card surcharges have likely caused the reduced value of reward programs, with providers passing on costs to consumers.
With nearly 50% of Australians owning at least one rewards card, Lamont urged card holders to reassess the value of their cards to ensure they remain worthwhile.
“Rewards credit card holders really need to review their cards carefully to make sure they’re earning enough rewards to justify having these cards in their wallets and offset the annual fees which can be as high as $749,” she said.
While the Mozo research revealed a general trend towards reducing reward value, it found that Citibank actually bucked the trend, cutting their points requirement for a $100 gift card from 32,000 points to 23,700 points.
“At the other end of the spectrum, Bankwest upped the points required on two of its cards to earn a $100 gift card by 8,000 points and by a massive 10,000 points for a $100 cashback,” said Lamont.
“With the declining value of rewards cards, it’s more important than ever that consumers look for the best credit card for their needs. Unless they are spending up big and paying off their debt every month, a no frills, low interest rate and no or low annual fee card is likely to be the best option.”
Worried that your rewards card is no longer giving you the same value for money? The Mozo Rewards Revealer tool compares 116 different rewards cards to find the right one for you.