You could almost hear a cheer go up around the country when debit and credit surcharges were banned last week. Kicking in on October 1, it’s the removal of that checkout kick in the teeth, when you have to pay just that little more than you expected.
But what’s been largely missed is – for credit card holders – that tiny bit of payment pain funds a bunch of personal gain. Complimentary travel insurance, airline lounge passes – such offerings could soon be scaled back.
But the mainstay of a smart credit card strategy – big rewards points – is on borrowed time. Let’s look at what’s happening before the new best frequent-flyer practice.
No longer can merchants charge you the explicit fee when you flash the plastic but, to compensate them for this, reduced too is what’s called the interchange fee that terminal-operating banks can charge payment-providing banks to facilitate the transaction.
For credit cards, it’s being slashed 63 per cent from 0.8 per cent to 0.3 per cent. That’s a huge revenue cull, revenue that card providers currently pay airlines for points.
When the Reserve Bank did this last time, in 2017, the impact on points was dramatic: reduced points earn rates, some by up to a half and some capped, and slashed sign-up bonuses. That’s also why you often see bonus points paid across two years now, as a customer loyalty play.
The opportunities to earn points on the ground are not gone, they’re just different.
While it’s still been feasible from cards alone to earn, say, 200,000 points and secure a sweet holiday, this latest RBA crackdown means frequent flyers can probably soon forget cards for big bulk points.
So what should you do instead?
Thankfully, the opportunities to earn points on the ground are not gone, they’re just different. You might also have to do a few different things to equal a previous card haul.
We’ll look at Qantas as Australia’s largest scheme, covering 50 per cent of the population, with the most on-the-ground options for points accrual. But there are some similar opportunities with Virgin’s Velocity.
Some of the best earning opportunities are from Qantas itself (although with reduced credit card competition, it remains to be seen whether these deals may be pared too). As always, you need to make sure the product itself represents good value, or at least it does when you factor in the points.
Qantas Health Insurance: Average private health premiums went up 4.41 per cent last week, so it’s a good time to re-evaluate your cover anyway.
To lure you across, Qantas Health Insurance comes with a massive sign-up bonus today – 140,000 Qantas Points for new customers who join by April 9. Points are awarded based on your level of cover over six months.
And there’s still an angle here if Qantas cover is not for you: the Qantas Wellbeing app is completely free and gives you points for basic stuff, like walking and sleeping.
Just for hitting 10,000 steps a day and meeting sleep targets, you can make up to 1000 points in your first month. (You’ll earn even faster if you do have a policy, essentially getting paid to do things you should probably be doing anyway.)
Qantas Money: There are all sorts of points/product configurations on offer but Qantas Home Loans is an interesting one, with 100,000 points paid every year for the life of the loan.
Qantas Shopping: This is just like a portal for big name brands, thousands of them, but one where you can earn multiples of points, often at a boosted rate. Before you buy anything online, take 30 seconds to check.
You can also earn bonus points on top of whatever your paying credit card gives you, in a nice little stack hack. And it’s basically the same deal with Qantas Hotels and Qantas Luxury Holidays.
But outside Qantas’ ecosystem, what else is on offer?
Everyday Rewards: Your weekly grocery shop is a goldmine. At Woolworths, BIG W or BWS, through Everyday Rewards, points convert to Qantas at a 2:1 ratio. In particular, watch for their promotions – sometimes they’ll do 10 times points on certain products or, if you spend over a threshold, bonus points.
Gift cards: A huge additional win – and one to watch for every week – is periodic gift card promotions through Everyday Rewards or Qantas Shopping, with say 2500 Qantas points or as much as 20 times points sometimes.
These are especially good for racking up points on things you were going to buy anyway – again, you can pay with a points credit card.
Utilities and petrol: Your power bill can also feed your points balance, via providers like Red Energy and Origin Energy which usually give thousands of bonus points just for switching over.
Then you’ve got ongoing earning. Both of the above providers give you points for every dollar you spend on electricity at a 2:1 conversion for both. You could bank 20,000 points a year just from keeping your lights on.
Ditto with the current pain point: fuel. Fill up at Ampol or BP and at least you’re earning points for all the expense.
It’s time to implement alternative points collection strategies rather than credit cards to stay on board. The end of surcharges carries quite the sting in the tail.
Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com. Follow her on Facebook, X and Instagram.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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