Commonwealth Bank slashes frequent flyer points on credit cards

Commonwealth Bank slashes frequent flyer points on credit cards

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. 

Commonwealth Awards

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.

Chris Chamberlin
Chris Chamberlin is a senior journalist with Australian Business Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!
 

21 comments

  • Phil Young

    Phil Young

    10 Sep, 2013 11:28 am

    This makes the Woolworths Mastercard continue to look a pretty good deal.  With an annual fee of around $80, they offer 1 point per dollar, with no annual cap.  Can you beat that?

    Their only problem is that they sometimes provide very small credit limits, and one has to fight hard to get it increased.

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  • watson374

    watson374

    10 Sep, 2013 12:01 pm

    Yay for Qantas Cash.

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  • SydneyDoc215

    SydneyDoc215

    11 Sep, 2013 01:12 pm

    Depending on circumstances the HSBC Visa Qantas Platinum Card may be better. Yes the $199 annual fee is more but in addition to the 1 point per dollar on local spending they also give a return of 2 points per dollar for overseas spending. Personally for someone like me who purchases most of my airline tickets from overseas sites and uses my card for overseas expenses the points can rack up pretty quickly. Have to admit that I get great business class fares from overseas travel agents as I am not originally from Australia so for someone who spends locally I agree the Woolworths card would be just about the best at the moment.

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  • mmarco

    mmarco

    13 Sep, 2013 04:41 pm

    Hi SydneyDoc215

    Do you actually purchase airline tickets from overseas sites with an Australian departure port?

    If yes would you can to share which sites allow you to do that?

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  • mmarco

    mmarco

    13 Sep, 2013 04:41 pm

    Hi SydneyDoc215

    Do you actually purchase airline tickets from overseas sites with an Australian departure port?

    If yes would you can to share which sites allow you to do that?

    No member give thanks

  • KG

    KG

    10 Sep, 2013 11:31 am

    Interesting article especially in conjunction with the article of Ben Schlappig yesterday and yet another example of the fact we live in a different world where points are not handed out like candy when taking out credit cards / services from Financal Services companies (which is the main points generator for US based FF).

    I wonder if this change was prompted by the fact that CBA has to pay QF a much higher fee to buy the miles. Don't think this info is available however?

    Let's hope the other banks will not follow suit (I know NAB made some slight changes recently to their FF earning  cards, but not affecting earning of FF points).

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  • TheRealBabushka

    TheRealBabushka

    10 Sep, 2013 12:22 pm

    It's a simple case of demand and supply. With only two main operators, each with their suit of high-end and low-end products, it would not make sense for them to compete aggressively through frequent flyer schemes.

    Consequently this affects the consumer through limited choices for earning points from third parties, poor rates of accrual from existing channels and fewer opportunities to game the system.

    I fear this is yet another variant of the “tyranny of distance” argument, which has precipitated the idea that rampant competition is not ideal for survival – that somehow managed oligarchy is the consequence to bear to ensure our current living standards and quality of life.

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  • sagidec

    sagidec

    10 Sep, 2013 01:45 pm

    Saying goodbye to CBA credit card for me.

    I've got QF Bankwest Plat which earns me 1 QF point per dollar.

    AMEX Plat CBA will be comparable to Plat Edge which Membership Reward points are much more better value than CBA Awards and I get a free domestic flight annually.

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  • charlieg

    charlieg

    10 Sep, 2013 01:57 pm

    I received a letter that my Qantas American Express Ultimate Card was changing from 1.5points per dollar to 1.0 points per dollar in July.

    Is there ANY Card out there that still offers 1.5 points per dollar for general purchases? (I dont need the insurance and concierge services)

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  • KG

    KG

    10 Sep, 2013 02:07 pm

    The NAB Premium Card (formerly NAB Platinum) offers 1.5 points per dollar spend on everyday purchases. Points are capped at 100K per statement period (so effectively you can earn a maximum of 1.2 million points per year....). Fee is reasonable at 250aud per year and it even has insurance and concierge sevrices (although you do not need it).

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  • sagidec

    sagidec

    10 Sep, 2013 02:56 pm

    Sounds like the high annual fee on this card is not worth the point reduction.

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  • Chris Chamberlin

    ChrisCh

    12 Sep, 2013 11:21 am

    The CBA Diamond Awards American Express continues to earn 1.5 Qantas points for every $1 spent after these changes take effect, as do others like the Westpac Earth Black American Express... both of these carry annual fees of $395 though (or $425 with CBA if you don't also hold a qualifying account).

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  • highflyer

    highflyer

    10 Sep, 2013 02:56 pm

    Thanks for the heads up.. looks like it will be bye bye Comm Bank Plat Amex and hello Qantas Cash Card for the time being.

    No member give thanks

  • Darkavid99

    Darkavid99

    10 Sep, 2013 05:37 pm

    I believe for Visa, Macquarie and Citibank have the best for Qantas at 1 for 1 uncapped or $200K a year which to be honest is a fair bit.

    Virgin money Platinum offers 1.25 for every dollar spent direct to Velocity uncapped.

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  • sagidec

    sagidec

    11 Sep, 2013 12:22 pm

    Which Citibank VIsa?

    Visa Select? Visa Signature? or the standard Visa Platinum that you are referring to?

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  • Darkavid99

    Darkavid99

    11 Sep, 2013 12:31 pm

    The new Signature card. Select does as well although the annual fee is a fair bit higher and I dont think its worth it personally for only an extra point on Qantas spend:

    Additionally, all these cards say eligible spends, I wonder what an ineligible spend is?

    See the link

    http://www.qantas.com.au/fflyer/dyn/partners/card-citibank

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  • Chris Chamberlin

    ChrisCh

    12 Sep, 2013 11:36 am

    Citibank defines "Eligible Transaction" in their T&Cs.

    Note that while the first page of the document does mention a Signature card, this document might not match up with the specific card type that you were looking into, so for that reason, you'd be best to check into this yourself (or to contact Citi).

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  • sagidec

    sagidec

    11 Sep, 2013 08:42 pm

    Ok - I'm confused.

    Between 1 Oct to 1 Nov:

    Spend on AMEX Platinum: $1 to 2.5 CommAward Points which converts to 1.25 Velocity points. (exchange 2.5 CommAwards to 1 Velocity Point)

    After 1 Nov:

    Spend on AMEX Platinum $1 to 2.5 CommAward Points which converts to 1 Velocity Point. (exchange 2.5 CommAwards to 1 Velocity Point).

    Am I correct?

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  • Chris Chamberlin

    ChrisCh

    12 Sep, 2013 11:10 am

    Due to the changes surrounding the Commonwealth Awards earn rate, the Platinum Awards American Express does drop to 2.5 Awards points per $1 spent on October 1 – which translates to 1.25 Velocity points per $1 spent (a month ahead of the changes scheduled for Velocity members with cards in the other tiers).

    On November 1, the 'exchange rate' for converting CBA Awards points into Velocity points is affected only for those holding Awards and Gold Awards cards, while the rate for Platinum and DIamond Awards cardholders remains at 2 Awards = 1 Velocity.

    Here's a screenshot from the CBA website, which hopefully makes things a little clearer:

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  • Longreach

    Longreach

    13 Sep, 2013 04:08 pm

    Thanks for that Chris. From what I can distil from all that, there will be no change at all for a Diamond Awards cardholder, in respect of either Qantas or Velocity.

    Must admit I hadn't realised CBA charges $395 for the card for new applicants.  When they introduced the Diamond level a couple of years ago they upgraded Platinums to Diamond for no additional annual charge. 

    If there is no loss of points, $250 p.a. will do me.

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  • Chris Chamberlin

    ChrisCh

    13 Sep, 2013 04:43 pm

    My pleasure Longreach!

    You're correct – the only change for Diamond Awards users is the loss of Air New Zealand's Airpoints from the Awards program.

    I'm not sure about everyone else, but I'd always secretly hoped that the CBA would bring more airline partners on board (a la WBC Altitude)... with this latest announcement, I won't be holding my breath!

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