The Commonwealth Bank is set to slash the rate at which the bank’s American Express, MasterCard and Visa credit card holders earn Qantas and Virgin Australia frequent flyer points.
The as-yet-unannounced changes to the per-dollar earning for CBA’s family of Commonwealth Awards cards – flagged in the fine print at the bottom of this web page – will take effect from October 1st.
In particular the cuts will see Commonwealth Bank cardholders hit with Australia’s worst earning rates for Qantas Frequent Flyer points.
Additionally, from November 20 the bank will no longer allow points to be transferred to Air New Zealand’s Airpoints program, which closes the door to flight redemptions across the breadth of the Star Alliance.
Here’s how the changes shake out.
Qantas Frequent Flyer
From October 1, the following reductions to Qantas Frequent Flyer earn rates (per $1 spent) will apply:
Awards card: American Express drops from 0.75 to 0.6 points, with MasterCard/Visa down from 0.5 to 0.4 points.
Gold Awards card: American Express from 1 to 0.8 points, and MasterCard/Visa from 0.5 to 0.4 points.
Platinum Awards card: American Express from 1.5 to 1.25 points, while MasterCard/Visa remain at the already-low 0.5 points.
Diamond Awards card: No changes are being made to the current earn rates (1.5 points with American Express and 0.625 points with MasterCard).
Taken as read, CBA’s Awards cards will offer Australia’s worst earning rates for Qantas Frequent Flyer points.
The point-capping rules for each card remain unchanged.
Velocity Frequent Flyer
Many Virgin Australia travellers also take a hit, with the bank decreasing the value of existing Commonwealth Awards points for customers with Awards and Gold Awards cards – although not the premium Platinum and Diamond cards – by setting a poorer ‘exchange rate’ against Virgin Australia’s Velocity Frequent Flyer scheme.
Customers can currently convert every 2 Commonwealth Awards points for 1 Velocity point, but after November 1 the swap rate jumps to 2.5 Awards points, representing a 25% cost increase on the previous rate.
Here are the lower ‘effective earning rates’ for converting Commonwealth Awards (based on each dollar spent) to Virgin Australia Velocity points as of November 1.
Awards card: American Express from 0.75 to 0.6 points and MasterCard/Visa from 0.5 to 0.4 points.
Gold Awards card: American Express from 1 to 0.8 points and MasterCard/Visa from 0.5 to 0.4 points.
Platinum Awards card: American Express from 1.5 to 1.25 points, while MasterCard/Visa remain at 0.5 points.
Diamond Awards card: these retain their existing earn rates (1.5 points with American Express and 0.625 points with MasterCard).
Air New Zealand Airpoints
D-Day for the CBA’s Air New Zealand flyers is November 20, after which you’ll need to funnel your Commonwealth Awards to your Virgin Australia Velocity account and make Air NZ bookings by treating the Kiwi carrier a Virgin Australia partner.
The Platinum Awards American Express card is also facing a reduced earn rate when it comes to the bank’s own Commonwealth Awards.
From October 1, cardholders will earn 2.5 Awards points per $1 spent, down from the existing rate of 3 Awards points per dollar.
All other cards (including the Platinum Awards MasterCard/Visa) retain their existing Awards earn rates.
Why wasn’t I told?
If you’re wondering why the Commonwealth bank hasn’t advised you of these changes, the answer lies in the applicable Terms and Conditions which you can download here [170kb PDF].
Section 2, pages 3-4, allows the bank to make changes “at any time”, provided that customers receive “at least 20 days written notice of any changes … to Qantas Frequent Flyer Direct or Airline Rewards … which the bank reasonably considers to be material”.
Assuming the CBA rates this drastic devaluation of points as being noteworthy and ‘material’, we’d expect that customers will receive a letter from the bank this week.
Keep up to date with the latest news for business travellers and frequent flyers: follow @AusBT on Twitter.