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

istock_79305201_small5

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.

Did you find this helpful? Why not share this news?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

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. 

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 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.

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.

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.

How do credit cards work?

Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.

How to get money from a credit card

You can get money from a credit card, but generally it will cost you.

Withdrawing money from a credit card is called a cash advance, as it operates more as a loan than a simple cash withdrawal. Because it is a loan, you may be charged interest on your cash advance as soon as you make the withdrawal. Interest rates are also usually much higher for cash advances than standard credit card purchases.

In addition to the interest rate, you may also be charged a cash advance fee. This could be a flat rate, or a percentage of your total cash advance. If you are considering a cash advance, make sure to add up how much it will cost you before committing.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

How long does it take to get a credit card?

There are a few stages you need to go through to get a credit card; each one takes a different length of time.

Applying for the card online, over the phone or in person is the fastest step. This usually takes around 15 minutes, provided you have all of your documents handy.

After submitting your application, it usually takes between one to 10 business days for the lender to assess your eligibility. Some lenders offer instant approval, although you will need to send supporting documents before it is official.

Once your application has been approved, expect to wait between one to 14 days to receive your card in the mail. Keep in mind that delays can happen during busy periods, such as if the lender has launched a special deal.

What is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How do you pay off credit cards?

The best way to pay off a credit card bill is to set a realistic spending budget and stick to it. Each month, you’ll get a credit card statement detailing how much you owe and how long it will take to pay off the balance by making minimum repayments. If you only make the minimum repayments, it will take you years to pay off your outstanding balance and add extra costs in interest charges. To avoid any extra charges, you should pay the entire bill.