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Credit card lenders taking axe to rewards programs

Credit card lenders taking axe to rewards programs

As of July 1, the way consumers earn and spend rewards points will drastically change. 

These changes come from recommendations made the Reserve Bank of Australia (RBA) who put forward regulations that will cap interchange fees from 2.0 per cent to 0.8 per cent.

Interchange fees have previously been used to fund lender rewards programs. 

RateCity research has found that credit card companies are cutting ‘earn rates’ as much as 83 per cent, and capping the amount of points you can earn by up to 85 per cent.

Who has already changed?

NAB, Citi and Suncorp have already made changes to their rewards cards.

As of 15 June, NAB customers saw the amount they could earn per statement period drop from 25,000 to 5,000 on some cards.

Suncorp is the first provider to increase their ‘burn rate’, that is, the number of points you need to purchase rewards items, hiking them by around 17 per cent for their most popular gift cards.

RateCity Money Editor Sally Tindall said CBA and Westpac would be making similar changes come 1 July, alongside other banks including St George, Bank of Melbourne and Bank of SA.

“Your dollars will simply not generate as much,” she said.

“Even if you spend up big in a month, the points cap implemented by most of the big banks will see you hitting your limit before you earn anything worthwhile,” said Ms Tindall.

Major Credit Card Lender Changes:

CARD

WHAT’S CHANGED

REWARDS OFFERING

DATE OF CHANGE

CBA Awards Card

Reduced number of points earned outside of higher rewards merchants.

Reduced points cap.

Earn 1.5 points per $1 spent at higher rewards merchants & 0.5 points per $1 everywhere else.

New cap of 50,000 Awards points per year (30,000 for Qantas Frequent Flyer).

1 July 2017

CBA Gold Awards Card

Reduced number of points earned outside of higher rewards merchants.

Reduced points cap.

Earn 2 points per $1 spent at higher rewards merchants & 0.5 points per $1 everywhere else.

New cap of 75,000 Awards points per year (60,000 for Qantas Frequent Flyer).

1 July 2017

CBA Platinum Awards Card

Reduced number of points earned outside of higher rewards merchants.

Reduced points cap.

Earn 2.5 points per $1 spent at higher rewards merchants & 0.5 points per $1 everywhere else.

New cap of 150,000 Awards points per year (120,000 for Qantas Frequent Flyer).

1 July 2017

CBA Diamond Awards Card

Reduced number of points earned outside of higher rewards merchants.

Reduced points cap.

Earn 3 points per $1 spent at higher rewards merchants & 0.5 points per $1 everywhere else.

Max. of 1,000,000 Awards points per year

1 July 2017

Citi Signature Qantas Card

Introduced a tiered earn rate so you earn more points per dollar at certain merchants.

Introduced points cap.

Cap of $20,000 / month.

1 pts per $1 at a range of restaurants, hotels and flights, 0.75 pts per $1 at selected petrol stations, supermarkets and retailers, 0.5 points everywhere else.

15 June 2017

Citi Signature Rewards Card

Introduced a tiered earn rate so you earn more points per dollar at certain merchants

Removed the cap of $20,000 per statement period.

2 pts per $1 at a range of restaurants, hotels and flights, 1.5 pts per $1 at selected petrol stations, supermarkets and retailers, 1 pt everywhere else.

15 June 2017

Citi Prestige Qantas Card

Introduced a tiered earn rate so you earn more points per dollar at certain merchants.

1.5 pts per $1 at a range of restaurants, hotels and flights, 1 pts per $1 at selected petrol stations, supermarkets and retailers, 0.5 pt everywhere else.

15 June 2017

Citi Prestige Rewards Card

Introduced a tiered earn rate so you earn more points per dollar at certain merchants

3 pts per $1 at a range of restaurants, hotels and flights, 2 pts per $1 at selected petrol stations, supermarkets and retailers, 1 pt everywhere else.

15 June 2017

NAB Qantas Rewards Card

Reduced number of points earned.

Reduced points cap.

0.75 Qantas points per $1.

Max. of 3,000 points per statement period.

1 June 2017

NAB Qantas Rewards Premium Card

Reduced number of points earned.

Reduced points cap.

1 Qantas points per $1.

Max. of 5,000 points per statement period.

1 June 2017

NAB Velocity Rewards Card

Reduced number of points earned.

Reduced points cap.

0.75 Velocity points per $1.

Max. of 3,000 points per statement period.

1 June 2017

NAB Velocity Rewards Premium Card

Reduced number of points earned.

Reduced points cap.

1 Velocity points per $1.

Max. of 5,000 points per statement period.

1 June 2017

ANZ Rewards

Scrapped AMEX card.

Increased the initial earn rate on the Visa card however the rate reduces after you reach a certain spend each month.

1 point per dollar up to $1,000 / month and 0.5 points per dollar thereafter, with no cap on points.

5 August 2017

ANZ Rewards Platinum

Scrapped AMEX card.

Increased the initial earn rate on the Visa card however the rate reduces after you reach a certain spend each month.

1.5 points per dollar up to $2,000 / month and 0.5 points per dollar thereafter, with no cap on points.

5 August 2017

ANZ Rewards Black

Scrapped AMEX card.

Increased the initial earn rate on the Visa card however the rate reduces after you reach a certain spend each month.

2 points per dollar up to $5,000 / month and 1 point per dollar thereafter, with no cap on points.

5 August 2017

ANZ Travel Adventures

Scrapped AMEX card.

Increased the initial earn rate on the Visa card however the rate reduces after you reach a certain spend each month.

1.5 points per dollar up to $2,000 / month and 0.5 points per dollar thereafter, with no cap on points.

5 August 2017

ANZ Frequent Flyer

Scrapped AMEX card.

Removed the cap on the number of points you can earn.

Introduced a tiered earn rate.

0.5 Qantas points per dollar up to $500 / month and 0.25 points per dollar thereafter, uncapped.

5 August 2017

ANZ Frequent Flyer Platinum

Scrapped AMEX card.

Removed the cap on the number of points you can earn.

Introduced a tiered earn rate

0.75 Qantas points per dollar up to $3000 / month and 0.5 points per dollar thereafter, uncapped.

5 August 2017

ANZ Frequent Flyer Black

Scrapped AMEX card.

Introduced a tiered earn rate

1 Qantas points per dollar up to $7,500 / month and 0.5 points per dollar thereafter, uncapped.

5 August 2017

St George Amplify Platinum Card

Reduced points on overseas purchases

1 reward point per dollar spent at Australian and overseas outlets (0.5 points per dollar if you choose Qantas points)

1 July 2017

St George Amplify Signature Card

Reduced points on overseas purchases

1.5 reward points per dollar spent at Australian and overseas outlets (0.75 points per dollar if you choose Qantas points)

1 July 2017

Bank of Melbourne Amplify Platinum

Reduced points on overseas purchases

1 reward point per dollar spent at Australian and overseas outlets (0.5 points per dollar if you choose Qantas points)

1 July 2017

Bank of Melbourne Amplify Signature Card

Reduced points on overseas purchases

1.5 reward points per dollar spent at Australian and overseas outlets (0.75 points per dollar if you choose Qantas points)

1 July 2017

Bank SA Amplify Platinum

Reduced points on overseas purchases

1 reward point per dollar spent at Australian and overseas outlets (0.5 points per dollar if you choose Qantas points)

1 July 2017

Bank SA Amplify Signature Card

Reduced points on overseas purchases

1.5 reward points per dollar spent at Australian and overseas outlets (0.75 points per dollar if you choose Qantas points)

1 July 2017

Virgin Australia Velocity Flyer

Reduced earn rate

Earn 0.66 points per $1spend up to $1,500 and 0.5 points thereafter

15 June

Virgin Australia Velocity High Flyer Card

Reduced earn rate

1 point per $1for the first $8000 then 0.5 points thereafter

15 June

Suncorp Gold Credit Card

Increased the number of points needed to redeem some rewards such as major outlet gift cards by around 17%

Earn 1 point per $1, up to $1,500 per month and 0.5 points per dollar thereafter.

15 June 2017

Suncorp Platinum Credit Card

Increased the number of points needed to redeem some rewards such as major outlet gift cards by around 17%

Earn 1.25 rewards points per dollar.

15 June 2017

REWARDS CARDS – RATECITY PICKS

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There are still competitive options out there if you are willing to look beyond the major banks. The exception is ANZ who have decided not to implement a cap where you stop earning points completely. 

RateCity research has found that more competitive options would include looking for cards with low or no annual fees, without caps on points.

RateCity’s Choice for Rewards Cards:

Card

Annual Fee

Cap on points

Spend to break even

Perks

Coles Rewards MasterCard

$89

No cap

$8,900

2 flybuys points per $1, free delivery with Coles online, 62 days interest-free, no int transaction fees, $100 Coles voucher on sign up.

AMEX Essential

0

No cap

$0

Earn Amex points which can be transferred to a range of frequent flyer programs, no annual fee, moderate interest rate, smartphone screen insurance, $50 bonus on signup.

Coles No Annual Fee Mastercard

$0

No cap

$0

1 flybuys point per $2, free delivery with Coles online, no annual fee, 62 days interest-free, $100 Coles voucher on sign up.

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Learn more about credit cards

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

How to increase my Commonwealth credit card limit?

Commonwealth Bank credit cards are extremely popular in Australia for everyday purchases and big ticket items alikers. A number of the card’s functions can be customised, depending on your needs and desires. If you wish to increase your Commonwealth credit card limit using the CommBank, you can usually do so on the app or via NetBank.

In the CommBank app, tap on the ‘Cards’ icon and choose your credit card. Then, click on ‘Credit Limit’ and select the ‘Increasing your limit’ option. If you don’t have the CommBank app, you can also increase your Commonwealth Bank credit card limit through NetBank. Simply log on and go to Settings, then click on ‘Product Requests’ and then choose ‘Credit Card Limit Changes’. 

Once the bank has received your application, they will review your account and payment history. Based on this assessment, your application will either be approved or denied. If approved, your new limit will be applied to your card instantly. 

While increasing your credit card limit may be an easy process, it’s important to remember that you should only request limits that you can manage. A high limit increases the risk of having a larger debt, even with cards that provide low-interest rate options. So, it’s important to think carefully and seek advice from people you trust before increasing your Commonwealth Bank credit card limit.

Can I transfer money from my American Express credit card to my bank account?

If you’re an American Express credit card customer, you may not be able to transfer money from your credit card to your bank account. However, you may be eligible for cash advances, which involves withdrawing money through an ATM. 

To qualify for a cash advance, you’ll likely have to enrol for American Express Membership Rewards. Consider checking your online credit card account to see if you can withdraw a cash advance and, if so, the fees and charges you’ll incur for this transaction. 

You should remember that cash advances are different from balance transfers, which were available with some American Express credit cards earlier. Balance transfers allow customers to consolidate debt from high-interest credit cards to a credit card offering a lower interest rate. If you only recently applied for an American Express credit card, balance transfers may not be available irrespective of the card you own. 

Does Woolworths Qantas offer any credit card insurance?

Credit cards can be useful for managing your expenses, but they also come with other advantages like credit card insurance. Your Woolworths Qantas Platinum Credit Card may offer a host of complimentary insurance options, which include: 

  • Travel insurance: Cover for your whole family when they travel with you, with unlimited overseas medical emergency cover and $500,000 accident insurance for accidental loss of life.  
  • Purchase security insurance: If you purchase an eligible product with your Woolworths Qantas Platinum Credit Card, the cost of theft or damage that occurred within 90 days of the purchase will be covered, provided the amount doesn’t exceed the purchase price of the item or up to $2500 per event. 
  • Extended warranty insurance: If you purchase eligible goods with your Woolworths Qantas Platinum Credit Card, this complimentary insurance will extend the manufacturer’s Australian warranty by up to 12 months. 
  • Global hire car excess waiver: If you’re legally liable to pay an excess or deductible in the event of loss or damage to a rental vehicle that was booked using your Woolworths Qantas Platinum Credit Card, the costs will be covered. 

To find out more about Woolworths Qantas credit card insurance, you can call them on 1300 10 1234. 

What types of NAB credit card insurance are available?

If you hold a NAB Premium, Platinum or Signature credit card or a NAB Platinum Visa Debit card, you could be eligible for the bank’s free travel insurance. You may be covered for overseas travel and interstate flight changes, along with transport accidents, domestic hotel burglary, purchase protection, extended warranty and price protection. 

It’s important to note that the NAB credit card insurance only kicks in after you’ve made an eligible purchase, so you won’t get the credit card insurance benefits if you haven’t used the card.

To make a NAB credit card insurance claim, you can send an email to cardclaims@allianz-assistance.com.au. You can check the eligibility of your claim or make a claim online as well.

If you have a travel incident and need to speak to someone regarding your NAB credit card insurance, contact 24x7 Emergency Assistance on +61 7 3305 7499 (reverse charges may apply). You can also send an email to medical@allianz-assistance.com.au.

 

How can I increase my credit card limit on my American Express card?

If you want to increase the credit limit on your American Express (AMEX) credit card, you will need to apply through the AMEX Online Services, or by calling the number on the back of your card. You may need to share personal information that the bank can use to assess whether the requested limit is suitable for you and your current financial status. Once your application is approved, your new limit will be ready for use within an hour.

Why do different credit reporting bureaus use different scores?

The reason Equifax, Experian and Illion use different scores is because they are independent companies with their own different methodologies. As a result, a score of, say, 700 would mean different things at different credit reporting bureaus.

However, the one thing they have in common is that they divide their scores into five tiers. So if you receive a tier-two credit score from one bureau, you will probably receive a tier-two score from the others, as well.

Can I get a credit card on part-time/casual work?

Yes, as credit card providers look at your annual income amount as well as your occupation. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.

What happens if I have a bad credit score?

If you have a bad credit score, you might encounter two main problems. First, the lower your credit score, the more likely you are to be rejected when you apply for a loan or any other credit product. Second, if your application is accepted, the less likely you are to qualify for the lowest interest rates.

Why should I check my credit rating?

There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.

Lenders use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved, and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved, and the more likely you are to be charged higher interest rates and higher fees.