From October 1, those small surcharges we pay on debit, prepaid and credit cards will be scrapped under reforms by the Reserve Bank of Australia (RBA), saving customers about $1.6 billion each year.
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While this is good news for most of us, experts say some credit card holders may be worse off under the reforms.
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Here's what you need to know about the changes and how they could affect you.
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What could I be losing out on?
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Because the RBA is also lowering the cap on interchange fees (what a store would pay to your bank when you tap your card), it means most banks are looking to recoup lost revenue.
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A couple of ways they're doing this is by "drastically" changing what you can earn on your card (perks and points) and how much you're paying in card fees, says Nicole Pederson-McKinnon, a financial literacy expert and author.
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"What we're seeing is a massive clawback of the perks of credit cards and a complete repricing as well," she says.
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Ms Pedersen-McKinnon says banks have been "quietly slashing" these credit card perks, while increasing some fees, in the lead-up to the October 1 changes.
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"It's en masse and it's going to be for every credit card holder in the country," she says.
"
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Mostly it's changes to the earn rates on frequent flyer points.
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"Some interest rates are going up, some annual fees are going up, [while] some freebies like complimentary travel insurance are being curbed."
Ms Pedersen-McKinnon says banks are required to notify customers of any changes they are implementing to credit card products.
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"Those emails that you get saying, 'We have made a change to your credit card', you really need to be paying very close attention to," she says.
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"These are not small wording changes … [they are] dramatic changes."
So is having a credit card worth it?
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Senior financial planner Rebecca Pritchard hopes the changes encourage people to assess whether their credit card is serving them.
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"Banks are not charities, they are commercial institutions," Ms Pritchard says.
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The earn rate has been changing historically over time and that is going to continue to be a focus, whether it's through direct fees on cards or changing the earn rate for the points system.
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Both of our experts recommend weighing up:
- Increases to annual fees
- Increases to purchase rates
- Reductions in points earning rates
- Caps on points you can earn
- Cuts to perks such as travel insurance
"Those five levers are what the credit card providers are pulling to try and make these products remain viable," Ms Pedersen-McKinnon says.
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Ms Pritchard agrees, but says the bigger question for credit card holders is does it work for them financially?
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"If you can't be bothered with answering any of those questions, that is a bit of an orange flag to say maybe the system is going to take advantage of you," she says.
"Where you're going to fall over is if you're spending more than you otherwise would have and secondly, if you're paying interest.
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"That's like the universe's way of telling you, 'Hey, I'm not on top of my expenditure'.
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Should I sign up just for the points?
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In short, no, says Ms Pedersen-McKinnon.
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"You need to make sure that [credit card is] the best value product for you fundamentally," she says.
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She says credit card providers are trying to lock in customer loyalty and keep them there "rather than see you just collect the points and move on to the next card".
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"You are going to have to be really strategic to be able to amass the same amount of points," she says.
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There are still big bulk points on offer when you sign up, but these will now be split across two years."
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Our experts say it's worth considering options for earning points that aren't linked to credit cards.
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"There is an absolute plethora of loyalty programs and cashback options out there," Ms Pritchard says.
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"If you're in the mood to be creative and you want to be incentivised to put in effort to get money back, go for it."
These alternatives may include supermarket rewards schemes, petrol loyalty programs, energy providers and car rentals or hotel bookings.
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The Aporia
