Credit Card Apocalypse Imminent

There are just two days remaining until the value in Australia’s credit card reward programs is gutted. On 1 July (this Saturday), the RBA’s interchange fee regulations take effect. Australian banks have responded by cutting rewards points and implementing restrictive new earning caps.

The Commonwealth Bank, Westpac, NAB, ANZ, Citibank and even Diners Club are all lowering the earning rates on some or all of their cards. Citibank went one step further and retrospectively devalued its customers’ existing Citi Rewards points as well.

NAB is following the lead of several other banks that have already put in place restrictive new point-earning caps. Many cards will now only award up to a maximum number of points per month. Others are halving the earn rate after a certain spend is reached.

Meanwhile ANZ is removing Amex companion cards, while the other major banks are drastically reducing the number of points earned on their Amex cards. Curiously, St George and Bank of Melbourne have also taken the opportunity to reduce the number of points earned on overseas transactions – even though the RBA regulations do not affect international purchases!

Most of these changes are a consequence of the Reserve Bank’s 2015-16 Review of Card Payments Regulation. These regulations, which take effect on Saturday, limit the fee that banks can collect from merchants for processing credit card payments to 0.8% of the transaction value. These merchant fees are used by banks to purchase frequent flyer points from airlines. With merchant fees declining, banks are passing on the cuts to their customers.

The new regulations do not affect international transactions, nor transactions made on credit cards issued outside of Australia. Cards issued by American Express are also unaffected – and now represent better value than ever. Be sure to check out our helpful guide to selecting the best Amex card for you.

Join the discussion on the new regulations and how they are affecting credit cards HERE.

Matt Graham

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 70 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.