Cards lose the point

Credit card reward schemes may soon be a waste of money, so check up on your card deal, writes Sophie Elsworth

CREDIT card rewards schemes are about to take a turn for the worse, resulting in many lenders wheeling out bonuses to get new customers to sign up.

Annual fee waivers, tens of thousands of Frequent Flyer points, shopping vouchers and discounted interest rates are among the deals lenders are trying to attract spenders.

But from July 1, customers will have a tougher task racking up rewards points as lenders cut back on their offers and scale back how much spending can earn consumers value. They will also limit the number of points that can be accumulated.

The strict interchange fee regulations that kick in next month – the fee is how much they can sting customers who pay by plastic – will mean less revenue for lenders and in turn fewer rewards for customers.

RateCity spokeswoman Sally Tindall said the everchanging rewards cards landscape would make it tougher for consumers to reap any benefits from their cards.

“A lot of lenders are taking the opportunity to put on extra offers to get your business, and sometimes these can be extremely attractive, but when you crunch the numbers you could pay more in the long term for having that card,” she said.

“Customers should look at their spending habits ... if you spend a lot on your credit card and pay it off in full every single month, then a rewards card could be good for you.” Ms Tindall urged consumers to look closely at the card’s fees. Many can be hundreds of dollars a year and this could override any gains from a deal. For those who can’t pay their card off in full each month, she suggested looking instead at a card with a low annual fee and low interest rate. The Commonwealth Bank’s general manager of cards, David Singh, said there were still decent incentives on some of its higher-end cards which could give consumers benefits.

“Platinum and diamond customers travel overseas regularly so we are now offering them a new benefit of waiving international transaction fees for both international in-store and online purchases,’’ he said.

“All our gold, platinum and diamond customers can activate travel insurance online. Benefits include unlimited overseas emergency medical assistance and hospital expenses, cancellation cover, cover for lost luggage and personal belongings.”

The average card interest rate is about 17 per cent, which will sting customers hard if they fail to wipe the debt each month.