Banks claw back on credit cards rewards programs

SOME of the nation’s big banks are scaling back their credit card rewards programs by drastically shaving back the points value.

SOME of the nation’s big banks are scaling back their credit card rewards programs by significantly slashing the value of points earned for spending up.

The drastic cutbacks to the loyalty programs have resulted in many customers having to spend almost $15,000 — or double what they had to 12 months ago — just to get a $50 gift card in return.

New analysis by financial comparison website Canstar shows ANZ is the worst offender, slashing their earn rates on rewards cards by as much as more than half.

On an ANZ Rewards Visa card a customer now needs to spend $14,820 to get a measly $50 voucher — or the equivalent to $285 every week for an entire year.

And to make matters worse customers with this card have to spend $8160 more than they did one year ago just to qualify for the voucher.

Consumer group Choice’s spokesman Tom Godfrey criticised credit card rewards programs and said they were simply “marketing trickery.”

“They are designed to get you into very high interest rate products,’’ he said.

“The only thing that matters if you are carrying a credit card balance forward is the interest rate.”

But an ANZ spokesman defended the savage cuts and said they remained among the most competitive in the cards market and had a wide range on offer to suit customers with different needs.

“None of these cards have a cap on the number of rewards points customers can earn,” he said.

“We have cut the annual fee for our ANZ Rewards and Rewards Platinum cards.”

Some of their annual fee card costs have fallen by up to $54 — the ANZ Rewards Visa’s annual fee dropped from $89 to $80.

The nation’s largest bank, CBA, has also hit customers hard — this month card customers were informed their rewards for spending would be scaled back.

This includes their platinum and diamond awards cards which reduces the value of two CBA rewards points to one Qantas Frequent Flyer to 2.5 CBA points equalling one Frequent Flyer point.

The average credit card interest rate on a card without rewards is 14.17 per cent while the average card rate with rewards is 19.41 per cent.

Canstar research analyst James Slack said regardless of whether a lender caps cards points or not a customer needs to look at the fees and charges on the card.

“The right credit card for a person will depend directly on how much they are spending on the card and whether it is worth paying more in annual fees on a higher earning platinum card to get more rewards,’’ he said.

Westpac has not scaled back their rewards programs and NAB’s have stayed the same.

EMAIL:[e-mail]

TWITTER:@sophieelssworth