Changes & cuts to credit card reward schemes

How some customers’ bang-for-buck has been reduced – What the changes are and why they’re happening.

Over the past few months we’ve heard announcements from a range of credit card providers that they’re making cuts to how points are awarded under their credit card rewards schemes.

Many of these cuts have been rolled out now.

Changes to Credit Card Rewards

ANZ Bank – Changes between 2/3/2016 and 16/3/2016

These are the changes that have taken place to ANZ rewards cards:

  Effective Earn Rates (ANZ points per $1 spent)
Card Before Now
Rewards Black Visa 2 1.25
Rewards Platinum Visa 1.5 1
Rewards Visa 1.5 0.75

Notably, the “Rewards Visa” has undergone a halving from 1.5 points/dollar-spent to 0.75 point/dollar-spent. So effectively, “Rewards Visa” users will have to spend twice as much to get the same amount of points as before.

To make up for some of these cuts, ANZ is lowering some of its credit card fees:

  • The total annual fee for their “Rewards” cards (“Rewards Visa”) has been reduced by $9 from $89 to $80.

Commonwealth Bank – Changes Effective 2/05/2016

Commonwealth Bank has announced changes to the way their Platinum Awards and Diamond Awards cards earn Qantas points.

The “transfer rate” changes from 2 to 2.5, meaning people earning Qantas points will be impacted in the following way:

  Effective Earn Rates (Qantas points per $1 spent)
Card Current From 2/5/16
Platinum American Express 1.25 1
Platinum MasterCard 0.5 0.4
Diamond American Express 1.5 1.2
Diamond MasterCard 0.625 0.5

Citi – Changes Effective 18/03/2016

Citi announced the cuts to their loyalty program benefits late last year:

  • All Citi cards – BPAY transactions will no longer earn points.
  • Citi Rewards Platinum – transfer rate to Velocity changes from 2 to 2.5 Citi points per velocity point.
  • Citibank Signature – transfer rate to Velocity changes from 1.5 to 2 Citi points per velocity point.
  • Citibank Signature – Earn rate for international purchases from 4:1 to 1.5:1. New cap on points of $20,000 spend per month.
  • Citibank Qantas Signature – New point tier: Earn rate for purchases now 1:1 only up to $3000 per month. Then 0.5:1 capped at $10,000.

Virgin Money – Effective 1/04/2016

Since their credit cards are issued by Citi, Virgin Money credit card rewards schemes received similar changes:

  • All Virgin Money cards – BPAY transactions will no longer earn points.
  • Virgin Money Velocity Flyer Visa – Earn rate changes from 1:1 to 0.66:1 for the first $1500 spent each month. Remains at 0.5:1 for spend over $1500 each month.
  • Virgin Australia Velocity High Flyer Credit Card – Earn rate changes from 1.25:1 to 1:1. Points earning now reduces to 0.5:1 for spend over $10,000 each month.

Citi also issues Suncorp and Card Services credit cards, which are also undergoing similar changes.

Why are we seeing these cuts?

These reductions have a lot to do with the Reserve Bank of Australia’s (RBA) announcement regarding credit card interchange fees. Essentially, the RBA announced plans to reduce and cap these interchange fees – charges between banks which provide much of the funding for reward programs.

Although they haven’t come into effect, some of the banks have obviously already passed on the cost of the reductions to customers  by trimming their rewards schemes. Make sure you check the rating of your rewards program  – and compare credit card reward options here.

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