There has been a lot of talk about changes to credit card rewards programs in 2017. You might even have received a notification from your bank recently about how your rewards program is about to change. This is because of new interchange fee regulations that rolled out from 1 July 2017.
In 2016, the Reserve Bank announced that the ACCC would have the power to regulate and cap interchange fees, which are the charges banks apply to each other when accepting credit card payments. Banks use the profits from these fees to fund their rewards programs, so lower fees mean lower profits, and that’s why we’re seeing a lot of loyalty schemes drop in value now that the cap is in place.
Prior to the change, premium rewards cards generally attracted a fee of 1.5% to 1.7%, but this has since been capped at 0.8%. For credit cards, that’s meant lower earn rates and the introduction of points caps and reduced earn rate thresholds.
There are specific changes you should look out for if you’re a small to medium business earning rewards on corporate expenses. Unfortunately, recent research commissioned by American Express has shown that 73% of Australian SMEs have limited knowledge of the potential impact these changes could have on their rewards.
Here, I’ve highlighted a few examples of what has changed and how they could possibly impact your business’ rewards balance.
Points caps and reduced earn rates
A number of banks have introduced new or lowered existing points caps across their rewards credit cards. This means that you’ll either earn a lower earn rate or stop earning points altogether once you meet the spend threshold each statement period.
This is potentially concerning for a business cardholder, as you’re likely to be spending a lot more than the average cardholder each statement period. For example, the NAB Qantas Rewards card previously earned 1 point per $1 spent up to $20,000 per statement period. From 1 June 2017, this points threshold changed to 0.75 points (on Amex) and at 0.5 points (on Visa) per $1 spent up to $3,000 per statement period. Similarly, the ANZ Rewards Black didn’t have a reduced earn rate previously. However, cardholders earn fewer points per $1 spent once they spend $5,000 each statement period after 5 August 2017.
Depending on how much your business spends each month, these points caps and reduced earn rates could limit your points potential. If your business usually spends more than the monthly spending threshold, you might want to consider other cards that don’t have reduced earn rates.
Tiered earn rates
You may have noticed that some cards now earn different rates depending on the type of purchase you’re making. This can work for or against you depending on how you use your card.
For example, most of Citi’s Rewards credit cards used to have standard earn rates across all eligible purchases. If you look at the Citi Rewards Signature Visa card, for example, it previously collected 1.5 points per $1 spent up to $20,000 per statement period. From 15 June 2017, this changed to 2 points per $1 spent at major restaurants, hotels, flights and 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.
So while the standard the earn rate has dropped to 1 point per $1 on eligible purchases, you could potentially increase your points earnings if you regularly use your business credit card to book flights, cover business lunch bills or make international purchases.
This is an example where you need to consider your usual spending habits and factor in which type of card would reward your business’ costs the most.
Reduced earn rates on American Express dual cards
Previously, one of the major benefits of getting a dual rewards credit card was the accessibility of shopping with Visa or Mastercard and the higher earn rates when spending with your American Express. However, many banks have lowered how many points you can earn with your Amex, potentially reducing the incentive to sign up for one of these cards.
For example, Commonwealth Bank, NAB and Westpac have all cut how many points you can earn with your American Express card. ANZ even went as far as ending its relationship with Amex and dumping its dual cards altogether. Below we’ve highlighted three examples of cards that have been impacted by these reduced earn rates.
||Current/old earn rate
||New earn rate
||Changes applied as of
|Commonwealth Bank Diamond Awards card
||3 CBA Awards points per $1 spent on Amex
||3 CBA Awards points per $1 spent with Higher Points Merchants and 0.5 Awards points per $1 spent everywhere else
||1 July 2017
|NAB Qantas Rewards Card
||1 point per $1 spent on Amex up to $20,000 per statement period
||0.75 points per $1 spent with Amex up to $3,000 per statement period
||1 June 2017
|Westpac Altitude Black credit card
||3 Altitude Points per $1 on Amex
||2.5 Altitude Points per $1 on Amex
||1 July 2017
If your business credit card is a dual credit card, you might want to examine if it still offers enough points potential or if it’s time to switch to a Visa, Mastercard or American Express product. It’s important to note that American Express-issued cards haven’t been impacted by the interchange fee regulations, so its earn rates have remained the same following the interchange fee cap.
Cancelled points on ATO transactions
The credit cards that offer reward points on government purchases and tax office transactions were already few and far between, but the options have shrunk even further following 1 July. For example, Westpac cut the ability to earn reward points on ATO bills across its Altitude, Altitude Black and Altitude Platinum cards. If you use your credit card to pay your business’ tax bill, this could significantly impact your points balance.
You can see a complete list of rewards credit cards that have already changed or announced plans to do so on finder. For more information about how rewards programs work, check out Money Smart’s guide to loyalty schemes. See also: Credit card fee changes could devalue reward schemes used by SMEs, warns American Express.
About the author
Sally McMullen is the senior writer for credit cards at finder.com.au.