How you earn frequent flyer points is about to drastically change
It’s about to become a lot harder to earn frequent flyer points through credit card spending. The Reserve Bank’s upcoming caps on credit card “interchange rates” are squeezing bank margins – which means less money available to fund credit card rewards and other prized cardholder perks.
The banks have responded by dampening the generosity of credit card sign-up offers – reducing the incentive for customers to change banks to get a better deal. Frequent flyer points awarded for ongoing spending are also being sliced: in some cases, by almost 50 per cent.
Complimentary travel insurance has taken a beating; fees and interest rates have climbed, and the underlying conversion rates when transferring points from credit card programs to the airlines have also worsened, pushing discounted flights further out of reach.
Under the reforms, many customers will be paying more for their credit card but getting less value and fewer rewards in return. On the flipside, businesses will no longer be able to surcharge customers to use their credit card from October 1, potentially bringing down fees in other ways. That is, if businesses don’t adjust baseline prices to compensate.
Some banks are making more impactful cuts than others. Commonwealth Bank – Australia’s largest credit card issuer – is shutting down its current Awards scheme on September 29. From October 1, it will be replaced by an expanded version of CommBank Yello. It’ll offer points not only from credit card spend, but also through debit cards, home loans and insurance.
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This isn’t the end of flatbed flights using points, even for those who mainly earn their rewards on the ground.
What might seem a positive change is one that ultimately still reduces credit card frequent flyer points. One of the deepest cuts sees international spend on the bank’s top-tier “Ultimate” credit card drop from an equivalent of 1.5 Velocity points per Australian dollar charged abroad to just 0.8 Velocity points per dollar spent overseas from October.
That’s occurring through both a reduction to the card’s direct points earning rate, and by devaluing the conversion rate that governs points transfers from CBA to Velocity. Rubbing salt in its customers’ wounds, CBA is also introducing a $99 annual charge to earn Velocity points.
Other big banks are making their own cuts. NAB is updating its Qantas cards to combine lower baseline earning rates with tighter points tiering thresholds to reduce rewards. A customer spending $5000 per month on NAB’s Qantas Signature card will soon earn 2750 Qantas points each month – down from 5000 Qantas points at present.
Westpac’s own Black-level Qantas card also takes a nosedive, but a more modest one. On a $10,000 monthly spend, the prospective haul of Qantas points on standard purchases declines from 5000 today to 4000 come October.
Virgin Money is similarly serving up fewer points while increasing cardholder fees. HSBC is making a complete exit from the Australian consumer banking market in November, closing all personal credit cards in the process.
ANZ is bucking the industry’s doomsday trend as one of the only card issuers continuing to provide one full airline frequent flyer point per dollar spent via its top-shelf cards. However, that’s countered through reduced insurance coverage on some credit cards and a full removal of that insurance from others. New monthly points caps will also apply, versus limitless points earning at present.
American Express – which sits outside of the RBA’s interchange fee caps – hasn’t announced any further cuts. However, Amex devalued its Membership Rewards program in late 2025 to require 50 per cent more credit card points for equivalent flight rewards through its international airline partners.
For instance, to receive 100,000 frequent flyer points with the likes of Cathay Pacific Asia Miles or Qatar Airways Privilege Club, Amex cardholders could previously convert 200,000 Membership Rewards points (2:1 conversion). Now, the same reward requires 300,000 Amex points (3:1 rate).
But with the downfall of credit card points comes new opportunities. From December 8, Qantas will begin offering status credits on the ground to keep travellers hooked on points-earning plastic.
Through a combination of credit card spend, as well as grocery buying, insurance purchases, utility payments, hotel bookings, share trading and other eligible transactions, Qantas Frequent Flyer members could earn up to 140 status credits each year without taking a single flight. That’s almost halfway to annual Silver status.
Separately, bank incentives for new credit card applications may be taking a back seat, but aren’t expected to disappear entirely. While hopping to a new credit card may no longer deliver enough points for a long-haul jaunt in business class, the points incentive for doing so could still get you flying to that same destination in premium economy or economy. Alternatively, a credit card points bonus could cover a more comfortable journey closer to home.
This isn’t the end of flatbed flights using points, even for those who mainly earn their rewards on the ground. Knowledge is power – and in this case, your ticket to flying on points during the years ahead.
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