Credit card changes prompt switches

BIG changes to credit card reward programs this month have prompted consumers to ditch their old cards for new points-friendly products.

Several popular points programs are being watered down dramatically or even cancelled after Reserve Bank changes to interchange fees, but reward card experts say plenty of good deals remain.

Steve Hui, the founder of iFLYflat.com.au, said many bank-issued cards had changed their programs resulting in them earning less points per dollar spent.

“With some of them, after you spend $5000 in a month you earn no more points,” he said. “There are still some good cards out there – Amex-issued cards made zero changes.”

Mr Hui said competition among card providers had resulted in extra benefits such as airline lounge passes and free flights, and he said people should shop around to find a card that suited their lifestyle and spending habits.

People chasing points should use reward cards for all possible purchases, as long as they pay the balance off each month to avoid hefty interest charges.

“Every point adds up. Some people think a credit card is for large items only. It’s not, it’s instead of cash,” Mr Hui said.

Nic Shadiac, 30, recently swapped cards after hearing that his existing ANZ points program was being cancelled. The points he collects enable him to regularly fly from Sydney to Adelaide to visit family and friends.

“I used to use cash a lot, but now I use the card anywhere I can,” he said. “It comes with a free flight, and that pays the annual fee.

“At the end of the day, if you use cash you are not getting anything free. If you are using your card you are getting points for nothing.”

American Express Head of airline co brand partnerships and loyalty Kat Drew said the company was “very happy with the number of consumers coming to us”, and the market was telling them that people did not like points caps.

A common complaint about Amex has been that its cards are not accepted by as many merchants as Visa or MasterCard, but Ms Drew said Amex planned to double merchant numbers in the next two years and recently signed a new partnership with the Commonwealth Bank that delivered 100,000 extra merchants.

She urged consumers to compare card options. “There’s a lot of really attractive bonus offers on the table.”

Consumers should also understand how many points they would earn for each dollar spent, and what those points would pay for – their “burn rate”, Ms Drew said.

“People could think they are getting a great deal but when they go to redeem, it may not be so great.”