2019 and beyond, cc rewards and flights

[SOPOOR]

2019 will see a huge devaluation in the amex program
Churning offers still exist but seem to be less frequent/less generous as previous

Ato spend using gift cards is gone

And with various ccr changes

Eventually, will there become a point where the points earning becomes pointless we just use debit cards or non rewards no af cards


Or will the banks react to lower customers and sweeten their deals?

Ivr crunched some numbers, and its still worth it for me, but ita getting close to the not worth it point

At least ill have more free time!

 

[albyd]

FWIW here's my 2 cents worth:
I think it's out of banks' hands. The RBA has mandated banks reduce their interchange fees on MC and Visa which has reduced the revenue from which reward points have traditionally been funded and they've had to cut our rewards programs to keep them sustainable.

Amex have also come under pressure from customers wanting broader acceptance and merchants wanting lower fees (as cost to accept MC and Visa was falling and has reduced merchant fees to remain competitive with MC and Visa and increase acceptance. This has also reduced Amex's revenue and they've had to adjust their rewards program accordingly.

I think the $A falling to 70c hasn't helped - particularly as when we swap our CC points for airline reward points, these need to be paid for in $US so we're getting less $US for the same $A. This may get worse depending on the country's fortunes reflected in our share price - our currency.

We've been blessed with some manufactured spend techniques and abnormally high points opportunities (eg GCs and Explorer boost) but that's all drying up as the institutions funding them (WOW and Amex) have closed the loop hole after it started costing them too much.

This will eventually mean only the largest 'organic' spenders (eg mostly business owners) will be able to continue to make these programs pay.

There will likely be new opportunities as banks' appetite for different types of business will change over time - reflected in their offers to market. For instance, Westpac with Altitude have been able to wear the pain for some time to pick up market share by keeping their rewards exchange rates higher than other banks (say ANZ which went to 3:1 conversion a long time ago and Westpac has just joined it) These opportunities will pop up over time.

I'm sure I'm not alone in having a partner who enjoys the perks but has noticed the time commitment to get them. For me, the latest changes mean I'll have a simplified structure, managing less accounts at the one time. Will give me more time for my day job

 

[33kft]

I suspect there will still be plenty of competition in the Credit sector, especially with what appears to be a millennial-led acceptance issue for Credit Cards.

Bloomberg - Are you a robot?

If the credit card processors and banks don't want to be disrupted out of that segment of the market, they'll have to maintain appropriate incentives. It's cyclical and whilst the APRA regulations are making their lives hard now, soon enough bank boards will be leaning on consumer credit divisions to make people spend more and the programs will be back in full swing.

What I am not sure about is whether the incentives will remain travel-centric or perhaps lean towards a supermarket-esque cashback format similar to those in the US? Perhaps that would better suit the debt-weary millennial market they are grappling with?

 

[SOPOOR]

I suspect there will still be plenty of competition in the Credit sector, especially with what appears to be a millennial-led acceptance issue for Credit Cards.

Bloomberg - Are you a robot?

If the credit card processors and banks don't want to be disrupted out of that segment of the market, they'll have to maintain appropriate incentives. It's cyclical and whilst the APRA regulations are making their lives hard now, soon enough bank boards will be leaning on consumer credit divisions to make people spend more and the programs will be back in full swing.

What I am not sure about is whether the incentives will remain travel-centric or perhaps lean towards a supermarket-esque cashback format similar to those in the US? Perhaps that would better suit the debt-weary millennial market they are grappling with?

I find it odd that , the younger generation is seen as the instant gratification generation ,so that would mean more reliance on credit to get that gratification even if you cant afford it right away, but yet the trends are different!

as for the banks, if they wanted to increase their customer base, youd think theyd be introducing lesser fee cards, or bigger bonuses or some kind of incentive,
maybe they are just giving up in making huge profits in the credit card sector and focussing on other areas,

 

[Daver6]

With the reduction in airline/hotel points, I'd imagine this would have to hit those companies bottom line to some extent as well. I wonder if say Qantas were to lower the cost per point to the card companies, that would make much difference.

 

[albyd]

They can adjust the price but likely pass it on in the form of higher points required for award redemption which puts us consumers in the same boat.

Unfortunately have seen significant devaluations in the last year for popular programs as well as a reduction in earn rates.

 

[theblank]

Eventually, will there become a point where the points earning becomes pointless we just use debit cards or non rewards no af cards

No chance.

In any case we are spending 5x or more on credit cards for general living, than we were when rewards points first became a thing in Australia. In reality the points devaluation was just keeping all that in check. It used to take me a few years to earn enough points for a basic flight, in recent times it only takes a 3-6 months to earn enough to go overseas.

There was no way the good times were going to last forever, the me me generation never like it when they lose things, but they will eventually learn (we hope) that there is always ups and downs.

 

[33kft]

We definitely need to take into consideration not only inflationary pressures but also the wider acceptance of credit cards in day to day transactions. Things have changed a lot in the last decade, I've certainly noticed it given that I returned from living abroad last year, when I left Australia in 2009 you didn't have people tapping cards over every counter and now I rarely carry cash at all, full stop.

I think that any reactions we see now are just adjustments being made to keep the values within the appropriate margins, the concern is whether the adjustments go too far or incorrectly factor in future growth and cause the reward value to be a poor tradeoff for the fees charged.

 

[Daver6]

They can adjust the price but likely pass it on in the form of higher points required for award redemption which puts us consumers in the same boat.

Unfortunately have seen significant devaluations in the last year for popular programs as well as a reduction in earn rates.

They don't have to. There are already way more points in circulation than seats available in the premium cabins. Supply restricts their costs here.

 

[Legoman]

Eventually, will there become a point where the points earning becomes pointless we just use debit cards or non rewards no af cards

Already reached that point for me. The decision on which card to use for me now is determined by how close in the past the statement issue date was and whether the card is a 44 day or 55 day interest free one.

Maximising the interest free days before you have to pay it off is by far and away the biggest 'reward' you can get from a credit card these days. The points are just a bit of sugar on top if they come to you, but that sprinkling of sugar is so light and worthless these days that it's not worth chasing.

You can tell this is true by the fact that some bank issued cards have even started backtracking on the interest free days too. There are quite a few examples of formerly 55 day cards reverting back to 44 day. When they start doing that, you really know they're scraping the bottom of the barrel to shave costs.

 

[33kft]

You can tell this is true by the fact that some bank issued cards have even started backtracking on the interest free days too. There are quite a few examples of formerly 55 day cards reverting back to 44 day. When they start doing that, you really know they're scraping the bottom of the barrel to shave costs.

I believe that has come about primary due to the new legislation introduced this year (Jan 1) which removes the ability for banks to back-bill the interest when the statement amount is not paid in full.

 

[burmans]

Eventually, will there become a point where the points earning becomes pointless we just use debit cards or non rewards no af cards

Just to state the obvious, low points are not the same as no points, and it would have to be the latter to be pointless.

 

[SOPOOR]

Just to state the obvious, low points are not the same as no points, and it would have to be the latter to be pointless.

True, but if all you got was a movie ticket or a kettle after a year of hardcore points gathering, i certainly wouldnt bother