Australia’s biggest banks are rolling out fee hikes and slashing points programs to limit the sting from the Reserve Bank’s impending card surcharge ban.
Surcharges on debit and credit payments will be scrapped on October 1 following a decision by the Reserve Bank of Australia (RBA), billed as a way to save Australians money on every transaction.
Surcharges on debit and credit payments will be scrapped on October 1. iStock
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.
St George has announced it is lifting the interest rate on its Amplify Qantas Platinum credit card from 20.99 per cent to 23.99 per cent, while its annual fee will increase from $75 to $125.
The bank has also dropped the interest-free period on purchases by 10 days.
Westpac, meanwhile, will be lifting the interest rates on some of its credit cards and will also be increasing annual fees.
NAB credit card interest rates will be hiked by 1.5 per cent too.
Commonwealth Bank has responded by announcing major changes to its Commbank Awards program, which allowed credit card users to earn points, with a revamped CommBank Yello loyalty and points scheme.
Canstar director of data insights Sally Tindall said banks are desperate to find a way to limit profit pain from the surcharge ban.
“Banks don’t like losing money, it hurts their profit margins,” Tindall told 9News.
“So in a bid to protect them, they’re looking at credit card rewards programs to help make up the difference.”
Tindall said credit card users might want to evaluate their choice and weigh up how much these changes might impact their own back pocket.
“Add up how much you’re going to be shelling out in interest and also annual fees, currency conversion fees ... and weigh that up against how many rewards you’re actually likely to get in the next 12 months,” she said.
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