Credit Card Churning May Get More Difficult.

[Dr Ralph]

Just a heads up. Legislation is going to change as of 1st Jan 19 around credit card limits and the rules for closing/opening credit cards. The credit limits and how they will be calculated will be different so it will mean it will be harder to qualify for credit cards as of next year.

The other major change is the retention of customers with credit cards. In the past I have “threatened” to cancel my card unless they give me the next year fee free. As of next year as soon as u say “I want to cancel my card” the game is over they can’t offer any incentives for staying with that credit card

This has all been legislated by gov to assist the Australian public who are struggling with credit debt

What's the name of the Act you are referring to?

 

[whole-lotta-moxie]

What's the name of the Act you are referring to?

Not sure off the top of my head but I will follow up and let u know.

 

[rock86]

Just a heads up. Legislation is going to change as of 1st Jan 19 around credit card limits and the rules for closing/opening credit cards. The credit limits and how they will be calculated will be different so it will mean it will be harder to qualify for credit cards as of next year.

The other major change is the retention of customers with credit cards. In the past I have “threatened” to cancel my card unless they give me the next year fee free. As of next year as soon as u say “I want to cancel my card” the game is over they can’t offer any incentives for staying with that credit card

This has all been legislated by gov to assist the Australian public who are struggling with credit debt

What's the name of the Act you are referring to?

I don't even think it is legislated, ASIC have put forward the proposed changes but I didn't think it was passed as yet (but probably wrong).

Put simply ASIC have suggested that Credit Card applications be approved on the basis that the cardholder be able to pay back the limit within 3 years, which is a fair bit stricter then the current minimum rate. So in reality it will probably affect those that churn and hold multiple cards with high limits where their income isn't sufficient to service all the combined limit.

Personally I'm not too worried in as I have plenty of headroom and as I said before only hold 2 cards at a time and alternatively churn those, works well for my particular circumstances and also with pretty much every institution having a 12 month exclusion period anyhow.

 

[Dr Ralph]

I don't even think it is legislated, ASIC have put forward the proposed changes but I didn't think it was passed as yet .

That's my understanding as well.

Plenty of ideas are suggested. Few are actually legislated.

In fact I don't even know that this idea is even a Bill yet.

 

[mviy]

I guess I'll probably change cards again this year then.

Many of the changes proposed sound pretty sensible:

1. They'll be required to provide an online option to cancel cards in addition to the existing cancellation options.
2. credit limit will be able to be reduced online too, so if you "accidentally" chose a limit higher than what you want you could reduce it easily back as low as the minimum for that card.
3. They won't be able to send credit limit increase invitations even for those who have previously opted in. If you want your credit limit increase you'll need to contact the bank to start the process.

 

[mviy]

Looks like this is the Act: Treasury Laws Amendment (Banking Measures No. 1) Bill 2017 – Parliament of Australia

 

[rock86]

I guess I'll probably change cards again this year then.

Many of the changes proposed sound pretty sensible:

1. They'll be required to provide an online option to cancel cards in addition to the existing cancellation options.
2. credit limit will be able to be reduced online too, so if you "accidentally" chose a limit higher than what you want you could reduce it easily back as low as the minimum for that card.
3. They won't be able to send credit limit increase invitations even for those who have previously opted in. If you want your credit limit increase you'll need to contact the bank to start the process.

Add to that:

Reform 1 is implemented by Part 1 of Schedule 5 to the Bill, which introduces a new requirement that the unsuitability of a credit card contract or credit limit increase for a consumer be assessed according to whether the consumer could repay an amount equivalent to the credit limit of the contract within a period determined by ASIC.

Which ASIC looks to be setting it at 3 years - on the surface looks pretty close to what the current practice is (see the picture below for a snapshot of their consultation paper currently accepting submissions).

Looks like this is the Act: Treasury Laws Amendment (Banking Measures No. 1) Bill 2017 – Parliament of Australia

I agree that the reforms all seem pretty sensible, better then the awful changes (that don't look like they've had any beneficial effect) the RBA made year.

 

[burmans]

This will make it harder for people who can't actually afford them to get credit cards which frankly I think is a good thing. However for anyone who is paying CC in full each month not a problem, and frankly if you can't pay in full I also don't think you should be applying for more cards.

 

[whole-lotta-moxie]

It’s only just been decided that the “reasonsable” period to be able to pay back credit cards is 3 years. This was up in the air for a while.

There are 4 different reforms that the big banks will commence implementation from 1jan 19. It is being worked on now.

I think the major change to impact us will be when we try to get a credit for the annual fee if we want to try to keep a credit card. My understanding is in practical terms the banks will be walking a fine line if they want to try to retain the customer once they say they want to cancel a card. Using this language “cancel” will mean that they have no choice but to cancel the card. It will be interesting to see how this plays out and how the banks will deal with this. If you have a credit card with a big bank you should be noticed of these changes by Dec 18.

 

[mviy]

Will be interesting if there's a procedure one can follow to still get the annual fee waived e.g. if one can ring up "is there anything you can offer me as a loyal customer? Can you waive the annual fee for me for the coming year?". Then only if they refuse to waive the annual fee, proceed to ask to cancel the card, let them cancel it and move on.

Or would even that no longer be permissible? Could they not offer any incentive when you're asking if they can reward your loyalty?

 

[Renato1]

Direct Debit



If you did have a large purchase during that short period, why couldn't you just split the payment between your other held cards.



But we're at a point in our life, that we don't do too much extended foreign travel at present and therefore foreign purchases are not that big of a deal. So if I've got an AMEX I'm happy to cop the 3% fee, as the point that I earn will equal 1.5c and I know I will get much much more value out of it then that, otherwise I will use my debit account (and forego points ) that is forex fee free.

Thanks, you have a point about splitting a big bill between cards - awkward, but doable. It all comes down to the minimum credit limits are allowed on the cards, two of which I must keep (Amex $3000 and 28 Degree $6000) and one which I really want to keep (Jetstar - can't find its limit), and the one I half want to keep (Qantas Premier $3000). With those tiny limits I can probably churn (definitely could if I got rid of the Qantas one), but I still have to decide if I'm comfortable having such a small credit limits - especially on the 28 Degree card, when I go to Europe for three months..

Interesting that you value the points so highly, I only ever value them at one cent a point as I'm strictly an Economy person. I used 70,000 points last week to book a direct flight for us to Tokyo next year with Qantas, which is the first time I've used any in over two years.
Cheers,
Renato

 

[whole-lotta-moxie]

Will be interesting if there's a procedure one can follow to still get the annual fee waived e.g. if one can ring up "is there anything you can offer me as a loyal customer? Can you waive the annual fee for me for the coming year?". Then only if they refuse to waive the annual fee, proceed to ask to cancel the card, let them cancel it and move on.

Or would even that no longer be permissible? Could they not offer any incentive when you're asking if they can reward your loyalty?

At this point it is thought that the banks will not be able to give “incentives” that is annual fee waiver to keep the card. These sort of incentives/bribes which we love may become a problem. It may go against the reforms. We will have to wait and see but once we use the word “cancel” it will be all over they are suppose to say “ok” and not do anything else

 

[EestiTiger]

At this point it is thought that the banks will not be able to give “incentives” that is annual fee waiver to keep the card. These sort of incentives/bribes which we love may become a problem. It may go against the reforms. We will have to wait and see but once we use the word “cancel” it will be all over they are suppose to say “ok” and not do anything else

I think this is a good move. Cancelling cards is not fun, with the questioning, transfers to other departments, and drawn out phone calls. When I ring up to cancel a card - I want to cancelled so I can move to next card. I don't think I have ever accepted a retention offer. I know some on here write letters to cancel but I still prefer a phone call.

 

[rock86]

I think this is a good move. Cancelling cards is not fun, with the questioning, transfers to other departments, and drawn out phone calls. When I ring up to cancel a card - I want to cancelled so I can move to next card. I don't think I have ever accepted a retention offer. I know some on here write letters to cancel but I still prefer a phone call.

Completely agree.

Can't wait to have a drop down box in their internet banking portal and hit cancel, no phone agent asking "why are you cancelling, could we look at doing anything additional" yada yada. No, click the button, get the confirmation, and get on to the next churn card!

 

[burmans]

I think this is a good move. Cancelling cards is not fun, with the questioning, transfers to other departments, and drawn out phone calls. When I ring up to cancel a card - I want to cancelled so I can move to next card. I don't think I have ever accepted a retention offer. I know some on here write letters to cancel but I still prefer a phone call.

Given what you say about the pain of cancelling not really sure why you prefer that route, letters are painless and take way less time.

 

[Dr Ralph]

Given what you say about the pain of cancelling not really sure why you prefer that route, letters are painless and take way less time.

Better than that. Letters provide proof at a later stage. You'll always find they have no record of your phone call!

 

[JohnK]

Interesting that you value the points so highly, I only ever value them at one cent a point as I'm strictly an Economy person. I used 70,000 points last week to book a direct flight for us to Tokyo next year with Qantas, which is the first time I've used any in over two years.

I guess if people value points highly then it makes them feel much better accruing points.

My thinking is the same as yours as I am comfortable in economy. I would value points at around 0.5c-0.7c/point on international redemptions. Sometimes more depending on the complexity of the route and seasonality if one can get awards early.

I can usually purchase 3 economy airfares to Thailand for $2000. Using points for economy awards would require 168,000 points + AUD854 which would make my points worth 0.0068c/point. With 50% awards that makes points worth 0.0136c/point.

I don't value business that highly. At a stretch 50% more and certainly not what an airline thinks business is worth. I can't see premium surcharges as QF23/QF24 have no availability but on EK there and back surcharges are ~AUD1850 which would value 360,000 points at 0.00319c/point. Going to HKG is a little better as surcharges are ~AUD1150 and would value 360,000 points at 0.00513c/point.

 

[rock86]

I guess if people value points highly then it makes them feel much better accruing points.

My thinking is the same as yours as I am comfortable in economy. I would value points at around 0.5c-0.7c/point on international redemptions. Sometimes more depending on the complexity of the route and seasonality if one can get awards early.

I can usually purchase 3 economy airfares to Thailand for $2000. Using points for economy awards would require 168,000 points + AUD854 which would make my points worth 0.0068c/point. With 50% awards that makes points worth 0.0136c/point.

I don't value business that highly. At a stretch 50% more and certainly not what an airline thinks business is worth. I can't see premium surcharges as QF23/QF24 have no availability but on EK there and back surcharges are ~AUD1850 which would value 360,000 points at 0.00319c/point. Going to HKG is a little better as surcharges are ~AUD1150 and would value 360,000 points at 0.00513c/point.

While I haven't been around this forum too long, I've seen many a comment about you using your points for economy as business isn't worth it, and that's great if it works for you. But I don't see the benefits, and that personal view doesn't make how I value nor use my points any better/worse then yours. It's just that if I'm going to travel economy I'll pay for the cheap fares that you can obtain, as I can get a much better experience using my points for a premium fare.

And you're damn right I 'feel better' about being able to get that value out of accruing points for travel experiences that at the present time, without points, I definitely wouldn't be able to experience.

 

[Renato1]

Currently the only credit card I permanently hold is 28 degrees with the lowest limit they allow on it. I then churn cards so I usually have 3 in my pocket at the one time. It is a balancing act getting it right to close one before applying for new one. It is a pain to move all the DD's over from spend earning card, to another card to qualify with the minimum spend. It is worthwhile though, at least to me

I guess if people value points highly then it makes them feel much better accruing points.

My thinking is the same as yours as I am comfortable in economy. I would value points at around 0.5c-0.7c/point on international redemptions. Sometimes more depending on the complexity of the route and seasonality if one can get awards early.

I can usually purchase 3 economy airfares to Thailand for $2000. Using points for economy awards would require 168,000 points + AUD854 which would make my points worth 0.0068c/point. With 50% awards that makes points worth 0.0136c/point.

I don't value business that highly. At a stretch 50% more and certainly not what an airline thinks business is worth. I can't see premium surcharges as QF23/QF24 have no availability but on EK there and back surcharges are ~AUD1850 which would value 360,000 points at 0.00319c/point. Going to HKG is a little better as surcharges are ~AUD1150 and would value 360,000 points at 0.00513c/point.

Hi fellow Economy traveller,
That's a surprisingly low cents per point figure for travelling to Thailand. I always pay the surcharge as cash, and I got about a cent a point travelling to the USA two years back. And I've done better with our upcoming Tokyo one-way flight, which would either have cost me $696 each outright, or 35,000 points plus $176, so that I had a choice of paying an extra $520 or 35,000 points, which equates to 1.485 cents per point. So I sort of got a good outcome going with the points.

I say sort of because I am comparing to the inflated price of going one-way. Had I been flying return at the regular Saver price of $561 on the first leg, I'd only have gotten 1.1 cent per point, while at the current sale price of $471, I'd only have gotten 0.84 cents per point. Though that is all hypothetical, since no Economy Classic Reward seats are available when I search on the same outward bound date having clicked Return trip - which is very curious.
Regards,
Renato

 

[JohnK]

While I haven't been around this forum too long, I've seen many a comment about you using your points for economy as business isn't worth it, and that's great if it works for you. But I don't see the benefits, and that personal view doesn't make how I value nor use my points any better/worse then yours. It's just that if I'm going to travel economy I'll pay for the cheap fares that you can obtain, as I can get a much better experience using my points for a premium fare.

And you're damn right I 'feel better' about being able to get that value out of accruing points for travel experiences that at the present time, without points, I definitely wouldn't be able to experience.

I don't disagree with your comments and that's not what I was implying. If you think business is great then go for it. I don't.

I flew Thai First a couple of weeks ago and EK economy last week and all I will say is that the EK bulkhead seat was narrower so I am losing weight to make sure that's not an issue next time. I slept a little but I was happy watching movies this time.

We are all different. And there's no right or wrong when it comes to people's choice in their travels.