RBA changes set to cut credit card frequent flyer rewards

Credit card holders face having to spend more to get their frequent flyer points thanks to major reforms to credit card fees proposed by the Reserve Bank of Australia.

The changes could cut hundreds of millions of dollars in revenue the banks make from facilitating credit card payments for merchants through what's known as interchange fees, revenue they use to buy frequent flyer points from airlines to pass on to customers as rewards.

Airlines' significant credit card revenue is also set to slide as a result of the new rules, which will change the way airlines can apply credit card surcharges on tickets.

"The reduction in interchange fees, especially the cap on the highest credit card rates, is likely to result in some reduction in the generosity of rewards programs on premium cards," the RBA said in a statement announcing the draft of its new rules.

The proposed changes mean it's quite likely Australia's millions of credit card users that link their cards to airlines reward schemes will get fewer points for every dollar they spend.

It's thought the changes might also spell the end of the American Express "companion" cards that earn more frequent flyer points for a customer than the MasterCard and Visa cards used for the same account.

Read more at the Sydney Morning Herald: http://www.smh.com.au/business/banking-and-finance/rba-changes-set-to-cut-credit-cut-frequent-flyer-rewards-20151203-gled44.html#ixzz3ysbnf3va