Dual credit card applications drop following reward cuts
Credit card reward points changes have driven a shift in interest to American Express.
Over the last few months, you’ve probably noticed that many credit card issuers are cutting back the value of their rewards programs. Most of these changes will take effect from 1 July 2017 onwards and are a response to the interchange fee regulations that will also be introduced from this same date. Some of these adjustments include lower earn rates and the introduction of new or lower points caps.
While the interchange fee regulations don’t directly impact American Express-issued cards, we’ve also seen many lenders dropping earn rates on Amex cards across their dual products. In March, we even saw ANZ sever its ties with American Express and discontinue its companion card range. Given that the major appeal of a dual credit card was its ability to earn more points per dollar with Amex while also enjoying the wider accessibility of a Mastercard or Visa card, it’s no surprise that many cardholders have been disappointed by these changes.
In fact, at finder.com.au we’ve seen the interest in dual credit cards drop significantly since many of these changes have been announced in the last few months. In the graph below, you can see how credit card applications for dual and American Express cards made through finder have changed over the last six months.
Credit card applications between January and May 2017
As you’ll see in the graph above, the popularity of companion credit cards was steady until around mid-February when we saw a sharp decline. From this point and until the end of April, we’ve seen the interest in dual credit cards drop gradually.
There are a few triggers that could have influenced these changing attitudes. For example, ANZ and American Express ended their partnership in March and within a single week in May, NAB, Commonwealth Bank and Westpac (including St.George, Bank of Melbourne and BankSA) announced cuts to earn rates on Amex cards across their dual products. You can see the full list of proposed changes to credit card rewards here.
At the same time that we’ve seen applications for dual credit cards take a sharp downswing, interest in American Express-issued credit cards has risen. So, while dual credit card applications dropped from around 65% to 12% in a matter of two weeks in March, Amex applications rocketed from 35% to 88%. We have seen dual cards slowly crawl back up in popularity in May, but why did they fall in the first place?
Modifications to card offers and features will have played a part. However, these application trends also tell us that a major appeal of dual credit cards was the ability to earn more points on American Express. Hence why we saw Amex-issued card applications rise as dual cards dropped in the last few months. As a result, we could assume that interest in dual credit cards may continue to drop when most of these new earn rates are implemented in the new financial year.
However, interest in Visa and Mastercard exclusive products continued to rise over the last six months. By the end of April, Visa made up a total of 67% of all total applications while Mastercard comprised 3.92% of applications.
Of course, this data is based on applications made through finder.com.au and is only indicative of interest in the cards that are available on this site. However, it’s still an interesting indication of changing attitudes towards different types of credit cards. While banks have made cuts to reward earn rates across Amex products to save on costs from the lowered interchange fee caps, it will be interesting to see whether this leads to a drop in customer numbers.