More than a quarter of Australians are planning to spend more to cash in on credit card rewards ahead of the upcoming card surcharge ban, according to new research.
A survey by Money.com.au found 27 per cent of Australians plan to increase their credit card spending or bring forward purchases to earn points at the current rates before rewards are reduced.
From October 1, surcharging on debit and credit cards will be banned and caps on interchange fees will be lowered. Dominic Lorrimer
From October 1, surcharging on debit and credit cards will be banned and caps on interchange fees will be lowered.
The impending ban is expected to cost banks about $600 million per year.
This will include a reduction in interchange fees, which are paid by businesses to banks.
But financial institutions are finding ways to claw the money back through increasing card fees, raising interest rates and slashing customer loyalty programs.
Ahead of the card surcharge ban, Money.com.au head of insights Sean Callery urged Australians to consider their purchases carefully.
“It’s important not to let the points tail wag the spending dog,” Callery said.
“Bringing forward a purchase you were already going to make is one thing, but spending more just to earn rewards may not stack up, particularly if the points you accumulate will be worth less under the upcoming changes.
“If anything, cardholders should consider if it’s worth using their existing points before the changes come into effect.
“But either way, check what’s actually changing on your specific card and rewards program before you do anything.”
Callery said the economy could see a short-term bump in consumer spending if enough people bring their purchases forward or spend more to maximise their rewards.
“It’s unlikely to move the inflation dial on its own, but it comes at a time when the RBA is watching household spending and inflation closely,” he said.
“Anything that encourages consumers to spend more or sooner could add a little extra heat to demand.”
Frequent flyer experts have warned the card surcharge ban could also affect those who use points hacks for holidays.
iFLYflat Flights Club co-founder Steve Hui said Australians who collect points through everyday spending should watch for changes from their banks.
“The days of getting good value from collecting points passively is ending,” Hui previously told nine.com.au.
“Those who still want to use points to fly need to be more aware of the updated terms and conditions on their cards, so they don’t waste money on cards that now offer poor or no benefits.”