Reward points on credit cards set to drop

Using your credit-card reward points to pay for your next flight or upgrade is about to get a whole lot tougher. Australia's banks are slashing the number of points you can earn per dollar on their issued cards.A report presented by Anita Barar

Reserve Bank ... sets new cap on Credit card interchange Source: AAP

The Reserve Bank's new cap on credit-card interchange fees is the reason many credit-card reward schemes are being impacted.

 

According to payments analyst, it is the interchange fees funds the cost of a credit-card transaction. It is the fees which banks pay to each other.

 

According to Reserve Bank, there was a lack of transparency in the market. Hence the bank has now put a cap on the fees.

This has started from July the 1st.

 

It would now help businesses to accept the credit cards without a fear of unknown fee overheads.

But more banks will reduce customer rewards, as they were mainly being funded by interchange fees.

So perhaps now is the time in new Financial year to preview the reward programs. Also to understand that not necessarily, the more amount spent on credit card would get more rewards points.

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