Is your credit card rewards program still worth the money?
CREDIT card reward programs are being crunched by rule changes and consumers are being urged to check whether they are still worth the money.
ANZ’s recent move to scrap its American Express companion cards and reduce the benefits of its card rewards programs is likely to be followed by other banks, finance experts say.
It flows from a Reserve Bank decision to cap the fee that many card companies can charge merchants from July 1. The new, capped 0.8 per cent interchange fee means that many generous rewards programs will get the chop.
Beyond Bank Australia’s general manager of customer experience, Nick May, said consumers should keep a very close eye on credit cards in the coming months.
“Expect to see a lot of changes in reward offers,” he said.
Research group Canstar says reward programs remain popular, with one quarter of credit card searches on its website seeking rewards cards.
Is it time to take the scissors to your rewards card?
Canstar’s group executive financial services, Steve Mickenbecker, said credit card providers had been watering down rewards programs for the past year by making it harder to earn points or adding caps.
“We’ve already seen it starting, but ANZ’s is the biggest move — to withdraw the offering altogether. I wouldn’t be surprised if others follow, now that one of them has done it,” he said.
“Make sure you don’t lose sight of it, because there’s a good chance that the card that you bought a while ago may no longer be great for you. There’s going to be plenty of moves in this market.”
Belle Thomas, 19, said she considered reward programs when signing up for a new credit card, “especially if it is linked to something I am interested in, like partnerships with airlines or retailers”.
She said the tougher new rules were annoying but not surprising. “It just makes you more cynical about the whole concept of reward program and in the future it will make me look more closely at the other things banks offer like better interest rates, credit limits and annual costs.”
Rewards-focused credit cards usually have high interest rates above 20 per cent and annual fees above $300, and Beyond Bank’s Mr May said these costs often negated the benefit of earning reward points.
Belle Thomas says the changes are annoying but not surprising. Picture: MATT LOXTON
“All it usually takes is forgetting to pay one month and getting hit with interest to end up in the negative,” he said.
Mr May said many consumers had become smarter with their credit card use, using interest free days and balance transfers to reduce the interest they pay. “This means banks are carrying more costs, which results in fewer benefits to customers,” he said.
(source: Perth Now)
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