Australians are losing interest in rewards credit cards

Sally McMullen 25 August 2017

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More than 50% of Australians no longer see the value in plastic that earns points.

Australians are losing faith in their rewards credit cards, according to new research conducted by finder.com.au. This year, we’ve seen a bunch of the banks dropping the value of their loyalty rewards programs. So, when asked if these changes would impact their interest in a rewards credit card, it’s hardly surprising that Aussies are starting to turn their noses up at these products.

In fact, more than half of Australians have admitted that they’re no longer interested in rewards credit cards as a result of these changes. To be specific, 43% of participants said they are less interested in applying for a rewards credit card. Meanwhile, 11% of cardholders who already have a rewards credit card are considering ditching it.

This shift in attitude isn’t a massive shock, as Australians have been showing disdain to loyalty programs in general in the last few months. If you have a rewards credit card, you’ve likely noticed a number of changes to the way you can earn points. This is because some new interchange fee regulations that rolled out from 1 July 2017.

Previously, a bank could charge a merchant's bank a fee of 1.5% to 1.7% for processing a transaction from a rewards credit card. But since 1 July 2017, this has been capped at 0.8%. As banks use the profits from these interchange fees to fund their rewards programs, we’ve seen the value of such loyalty programs fall in the last few months.

According to research conducted by finder in May 2017, 1 in 3 Australians said they didn’t see the point of loyalty programs. 27% of Aussies even thought that these rewards programs were a scam.

Not all hope is lost for banks, though. 31% of participants said they will continue to use their rewards credit card and a further 15% said they’re still interested in applying for one.

How can I get more value from my rewards program?

If you’re one of the 46% of Aussies who are still interested in rewards programs (or you’re open to changing your mind), there are ways you can still get more out of your rewards credit card.

Take advantage of competitive bonus points offers

Although a number of banks have dropped the standard earn rates on their cards, many are ramping up the bonus points offers for new customers. At the time of writing, the Qantas American Express Ultimate card currently offers 100,000 bonus Qantas Points and the ANZ Altitude Black comes with 80,000 bonus Qantas Points. If you prefer Velocity Points, the Virgin Australia Velocity High Flyer card also boasts 80,000 bonus points. Or if you want the flexibility of credit card rewards, the American Express Explorer card offers 100,000 bonus points, while the NAB Rewards Signature card comes with 75,000 bonus points.

Each of these introductory promotions has specific spending and eligibility requirements, so make sure to compare your options thoroughly before applying. However, if you’re worried about how changed earn rates can impact your points potential, a big bonus points offer could help you get a head start on your rewards balance.

Pay attention to tiered earn rates

Some of the changes we’ve seen to rewards programs have included the introduction of or changes to tiered earn rates. This refers to when you’re rewarded with a different number of points per $1 depending on the type of purchase.

For example, the Citi Rewards Signature card previously offered 1.5 points per $1 spent up to $20,000 per statement. However, from 15 June 2017, this has since changed to 2 points per $1 spent on purchases made at major restaurants, major hotels and flights and on international purchases, 1.5 points per $1 at major petrol outlets, supermarkets and national retailers and 1 point per $1 on all other eligible purchases. Depending on your spending habits, these earn rates could work in your favour. If you frequently use your card to cover travel costs such as flights, accommodation and international purchases, you could benefit from these new earn rates.

So, make sure to consider how you use your credit card and whether you can maximise your points based on the types of purchases you’re likely to make.

Compare other options

If you’re unhappy with your current rewards credit card, make sure to compare your options before ditching rewards credit cards altogether. You can view a comprehensive list of all of the banks that have changed their rewards programs as a result of the interchange fee regulations. That way you can compare your card’s current offer with others on the market to see if there’s a better offer out there.

You can also use our rewards and frequent flyer credit cards comparison tables to find the card that will offer you the most value for your money.

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