Popular points hack Australians will need to re-think this year

Australians looking to boost their frequent flyer points with credit card rewards programs may soon have to re-think their strategy.

Surcharges on debit and credit payments will be scrapped on October 1 after a decision by the Reserve Bank of Australia.

This will include a reduction in interchange fees, which are paid by businesses to banks.

The surcharge ban aims to reduce the cost of receiving card payments for small businesses, who will no longer be able to directly pass the cost onto shoppers.

The elimination of the surcharge will mean less money for banks to put into their credit card reward programs, including frequent flyer points.

Point Hacks spokesperson Daniel Sciberras believes airlines are likely to sell fewer frequent flyer points to banks, as banks may rely less on points-based acquisition strategies.

“As a result, airlines will likely look to diversify the businesses they partner with to sell points, including retailers and other consumer brands,” Sciberras said.

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“They will also need to continue innovating their own loyalty products and member experiences to keep frequent flyers engaged.”

iFLYflat Flights Club co-founder Steve Hui said Australians who collect points through everyday spending should watch for changes from their banks.

“The days of getting good value from collecting points passively is ending,” Hui said.

“Those who still want to use points to fly need to be more aware of the updated terms and conditions on their cards, so they don’t waste money on cards that now offer poor or no benefits.”

Canstar data insights director Sally Tindall said there is a simple way to tell if you are still getting value.

“The quickest way to work out if your card still stacks up is to weigh up what you’ve reaped in rewards over the past year against what you’ve shelled out in annual fees and interest,” Tindall said.

“If the scales aren’t tipping in your favour, it’s probably time to reconsider whether you’re on the right card.

“Rewards cards typically only work if you pay your balance off in full each month.

“If you’re paying interest, even the biggest points haul is unlikely to make up for those charges.”

Finder money expert Richard Whitten said ultimately the changes were likely to affect a small section of credit card holders.

“It’s those higher-end cards where the annual fees start from $300 or more where you earn points up to, in some cases, one Qantas point or one Velocity point per dollar, those are the cards where I think you really will see those offers become less appealing and less lucrative,” Whitten said.

“You probably will see a certain type of customer decide it’s not worth it anymore because the annual fee is higher and they’re earning fewer points.

“They’ll do the numbers for themselves and realise it’s not really worth it.

“They will probably go back to using a cheaper and simpler credit card, or they will shop around and switch to a different bank or provider, providing there are ones that are still lucrative enough.

“It will be interesting to see which companies try to stand out as the most compelling offers after this ban comes into effect.

“The average person is better off because you’re no longer paying those small fees when you use your card at the shop.”

Major banks have started to scale back sign-up deals on credit cards ahead of the ban, including ANZ with its Frequent Flyer Black and platinum cards.

The bank reduced the sign-up bonus on its Frequent Flyer black card from a maximum of 130,000 points to 80,000 and removed the $200 cashback offer.

The platinum program sign-up bonus has fallen from 75,000 to 40,000 points and the $100 credit has been scrapped.

Meanwhile NAB has overhauled its white-labelled rewards cards including MyCard, BOQ and Virgin Money.

This includes changes to interest rates, annual fees, earn rates as well as burn rates, which is how many points a customer needs to redeem a reward.

The number of MyCard points needed to redeem a reward will jump by up to 62 per cent in some cases, downgrading the value of points earned.

However existing customers will get a one-off boost in points to compensate.

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.