Credit card rewards now virtually worthless as value plummets 96 per cent

[Einherjar]

‘Our results are a huge wake-up call’

I guess this is why we're churning and burning cards for the welcome bonuses because frankly, it's just not feasible to hold a rewards card with annual fees (excluding mortgage packages)

 

[andye]

I think it goes to show that 'most' people are playing the game badly (not to mention the authors' methodology of SYD-MEL Y as a marker of value)

 

[nickfromeastryde]

I think it goes to show that 'most' people are playing the game badly (not to mention the authors' methodology of SYD-MEL Y as a marker of value)

And long may they continue to peddle these stories and use the SYD-MEL Y as their point of measurement

 

[SOPOOR]

‘Our results are a huge wake-up call’

When I read articles like these it makes me sad.

Every year earn rates go down, exclusions from earning points increase, points required to redeem increases, redemption rates increase.

I remeber years ago when every visa/mc card was $1:1pt.
Now they're 0.5-0.6,
We still have cards like amex that do 2:1 or 3:1

Is there a chance that in the future the earn rates are so low that it's simply not worth bothering with any credit card?

If rates drop to a point they're so low I think I will use annual fee credit cards with interest free periods, travel insurance and extended warranty purposes only.

It will remove a huge chunk of my life

 

[glasszon]

‘Our results are a huge wake-up call’

When I read articles like these it makes me sad.

Every year earn rates go down, exclusions from earning points increase, points required to redeem increases, redemption rates increase.

I remeber years ago when every visa/mc card was $1:1pt.
Now they're 0.5-0.6,
We still have cards like amex that do 2:1 or 3:1

Is there a chance that in the future the earn rates are so low that it's simply not worth bothering with any credit card?

If rates drop to a point they're so low I think I will use annual fee credit cards with interest free periods, travel insurance and extended warranty purposes only.

It will remove a huge chunk of my life

You can blame RBA for that - with the cap on interchange it's simply impossible to maintain the old earn rate (albeit that trend started well before RBA cap came into effect), the only way they could maintain the old earn rate is if VA and QF massively devalue their program so each point is worth half of what it is before.

 

[PointsFinder]

I don't think it's that gloomy. Our own research found average earn rates have only gone from 1.07 points per dollar to 1 point per dollar since the interchange regulations.

Interestingly the average bonus sign up offers have increased from 40,000 to 50,000 points, while the average spending requirements to qualify for bonus points has risen to $3,000 up from $2,500 in 2017.

This was research based on the credit card market between June 2017 and June 2018.

 

[andye]

I'm sure my average point earn/$ has increased over the last 2 years. This has been at the expense of some inconvenience eg using giftcards bought with higher-earning CCs

 

[burmans]

I don't think it's that gloomy. Our own research found average earn rates have only gone from 1.07 points per dollar to 1 point per dollar since the interchange regulations.

Interestingly the average bonus sign up offers have increased from 40,000 to 50,000 points, while the average spending requirements to qualify for bonus points has risen to $3,000 up from $2,500 in 2017.

This was research based on the credit card market between June 2017 and June 2018.

I would have thought for 9/10 people the big bonuses come from signons rather than ongoing spend.

 

[Saltywings]

I would have thought for 9/10 people the big bonuses come from signons rather than ongoing spend.

And chances are, 9/10 people are people who have yet to go down the rabbit hole of points-collecting, of which churning is a major strategy.

 

[daft009]

And long may they continue to peddle these stories and use the SYD-MEL Y as their point of measurement

Amen to that! That's what we need more people to think

 

[Deleted member]

It is just another layer of nanny state interference by our benevolent government.
The irony is that there are always unintended consequences.

 

[Isochronous]

It is just another layer of nanny state interference by our benevolent government.
The irony is that there are always unintended consequences.

As always, increased regulation benefits the cosy oligopoly of big government, big business and big unions but not the consumer.

 

[theblank]

I think it goes to show that 'most' people are playing the game badly (not to mention the authors' methodology of SYD-MEL Y as a marker of value)

Yet I am making way more Rewards points now than I have in my entire life, excluding the sign up bonuses.

 

[deebens]

I've never had more points flowing in. news.com.au reporters wouldn't know their backside from their elbow, but no complaints with them discouraging people.

 

[oz_mark]

It is just another layer of nanny state interference by our benevolent government.
The irony is that there are always unintended consequences.

What were the unintended consequences?

 

[burmans]

What were the unintended consequences?

The banks being unable to rip quite so much out of their customers?

 

[Renato1]

The article only assess card valuations on points earned and card fees paid.

The aspect of Complimentary Travel Insurance associated with the higher fee cards isn't taken account of in the valuation - as pointed out by the CBA spokesperson..

That feature saves my wife and I stacks of money, especially when we travel overseas for more than a month and can suspend our local health insurance. That value swamps the cost of the credt card fee for us.

Interestingly, using the same analysis on the Qantas Premier Everyday card would show it better than the Bank's cards,
$24,000 spent leads to 18,000 points earned - worth $180 at a cent per point.
Less annual fee of $49
Average net value = $131
And that doesn't value the current 40,000 point bonus nor the free month of Complimentary Travel Inurance.
Regards,
Renato

 

[Deleted member]

What were the unintended consequences?

My observation is general in nature, more often than not the flow on effects aren’t immediately known.
Look at increased regulation in financial services for example.
The increased cost of compliance has driven up the costs pid by the consumer to the point where 65% or more of the Australian will be unable to afford the cost of advice. So while reform is good, over zealous reform has pushed the very consumer it was designed to help out of the market.

 

[blueythecat]

Seems like the typical kind of well researched "news" that is released on news.com.au - as has been rightly pointed out plenty of cards haven't changed very much. I'm still making as many points now per $ spent, as I was prior to the changes. I did have to change my credit card portfolio to keep this though.

I’m happy for news.com.au and others to keep releasing this kind of article though!

 

[p--and--t]

1. It was a news.com article after all folks - nuff said

2. Who in their right mind would use their points on Y Mel-Syd?

3. They got one thing right - out of the majors CBA would have to be the worst.

4. Renato1 - fully in agreement on insurance. In my case, the ANZ Black Card travel insurance that is always there and cuts in automatically without having to register trips is a good $650+ saving on an annual policy elsewhere.