Have a Commonwealth Bank credit card? It’s time to cancel it NOW!

Have a Commonwealth Bank credit card? It’s time to cancel it NOW!

The Commonwealth Bank may be Australia’s largest credit card issuer, but its range of frequent flyer credit cards are far from the best: in fact, under recent changes made by the bank, CBA’s cards are now among the worst in the country for earning frequent flyer points on your everyday spends.

Take CBA’s top-of-the-line Diamond Awards American Express card, which the bank spruiks as earning “up to 3 Awards points for every dollar you spend” – but in reality, most purchases made on the card accrue just one sixth as many points, being 0.5 Awards points per dollar spent.

That’s not even how many frequent flyer points you’re earning, either: you need to further cut that number in half if you collect Virgin Australia Velocity points, or divide by 2.5 if converting points to Qantas (while also being slugged an extra $30/year in fees for the privilege).

Crunching those figures, the 0.5 CBA Awards points you started with – earned in return for $1 spent on the AMEX – become a miserable 0.25 Velocity points or a downright pathetic 0.2 Qantas Points per dollar, given only after paying a hefty annual fee of $349, or $379 when earning Qantas Points.

That’s literally a quarter as many Velocity points as can be earned per dollar spent via the American Express Velocity Escape Card, or one fifth as many points as on the Qantas American Express Discovery Card: both of which have no annual fees, no points capping and an earn rate of one frequent flyer point per dollar spent on all but government transactions where the earning rate is halved.

So where does CBA provide more points?

CommBank reserves its headline ‘three points per dollar’ earn rate for Diamond American Express transactions made at supermarkets, petrol stations and major department stores in Australia (such as Myer and David Jones), and on overseas spend: which is equal to 1.2 Qantas Points or 1.5 Velocity points per dollar spent.

However, the competing American Express Platinum Edge Card delivers a much higher 3 frequent flyer points per dollar spent at supermarkets with a range of loyalty programs including Virgin Australia Velocity, Singapore Airlines KrisFlyer, Cathay Pacific Asia Miles and more, and 2 frequent flyer points per dollar spent at petrol stations.

The Platinum Edge’s annual fee is also nearly half that of CBA Diamond at $195, and includes a $200 annual travel credit as part of the parcel: so for those who normally spend at least $200/year on flights or hotels, the card is essentially ‘free’.

Regular department store shoppers could also consider the $295/year David Jones American Express Platinum Card: providing 3 Qantas Points or the equivalent of 2 Velocity points per dollar spent at David Jones, along with 2.25 Qantas Points or 1.5 Velocity points per dollar at supermarkets and petrol stations.

CBA’s only saving grace is a newly-introduced waiver on international transaction fees when using its Platinum and Diamond American Express cards overseas, but of course, that’s only true where AMEX is accepted.

If you do need to whip out the companion Platinum or Diamond Mastercard, you’ll earn one third as many points while also being stung with a 3% transaction fee – yet could be earning more points without forex fees on products like the ANZ Rewards Travel Adventures Visa, Bankwest Qantas World Mastercard and even the Coles Rewards Mastercard.

So, if you still have a Commonwealth Bank Awards credit card in your wallet and aren’t pushing through enough ‘free’ foreign transactions to offset its annual charge, it’s time to get the scissors out and ditch that old plastic, replacing it with a card that’s actually rewarding, not to mention competitive.

 

32 Comments

  • Michael Kao

    Michael Kao

    9 Aug, 2017 08:15 am

    @ Chris:

    I fully agree CBA card is the worst card on the market and not worth paying $395/yr for it. However, many of us who have mortgage with CBA can have the diamond card for free and it is very useful for travel insurance overseas as you don't have to pay airfares with the card. (It's particularly useful for flights redeemed with points, which most credit card travel insurances won't cover.)

    To me, my only reason to keep the card is free annual fee, and use it for overseas spent when Amex is accepted, plus the travel insurance. (Of course the extra perk of 2 visits to Amex lounge in SYD/MEL, which isn't that useful to me as I have too many Amex cards already! Lol)

    So fully agree, if anyone is still paying $395, either cancel it or negotiate annual fee waiver. If free, probably worth keeping it just for the travel insurance alone. 
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  • Chris Chamberlin

    ChrisCh

    9 Aug, 2017 09:35 am

    Hi Michael, great to hear you're making the card work for you: certainly helps take the sting off when CBA waives the annual fee if you're using it mainly for perks rather than points.

    For the benefit of other readers, we'll just highlight that CBA's travel insurance does require you to opt-in and activate it for each and every overseas trip you take - if you forget to activate it, you're not eligible for most of the cover it provides, and if you activate it only after you've left Australia, you're subjected to a three-day waiting period before coverage kicks in, beyond a few basic coverage categories that most travellers would consider inadequate.
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  • daveozsydney

    daveozsydney

    9 Aug, 2017 12:08 pm

    Totally agree Michael. This is actually my go to card for overseas transactions now (the Diamond Amex) as effectively earns 1.5 VA points per dollar with zero fx. Wins hands down versus other uncapped contenders of Bankwest World 0.66 QF ppd, Coles Mastercard 0.8 EY ppd. Previously I used Citibank prestige which earns more points but huge fx fees. I get it free with my mortgage too. I use other cards for all other categories of spend.
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  • russell

    russell

    9 Aug, 2017 08:33 am

    Agree on all points with Michael. Have the Platinum card as part of my mortgage with CBA and being free and great for the travel insurance component it's worth keeping. 
    Although I have learnt something as I didn't know the AMEX was fee free for overseas....
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  • mhotchin

    mhotchin

    9 Aug, 2017 09:07 am

    I also have the Diamond CBA card that I don't get a charge for - The only reason I keep it is because there is no charge. 

    I haven't used the American Express card for over a year and instead use an American Express issued car for most purchases, I just keep this for the MasterCard in places which don't accept American Express.

    On the other hand CBA has poor fraud detection with his card - I got charged 10K in London for the same day I had transactions on the Gold Coast - picked it up 2 weeks after the charges took place and it took CBA 2 months to get these charges reversed.. Go figure.
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  • Dean

    deanr

    9 Aug, 2017 09:21 am

    Ha, sounds like the people who actually like their card only like it because the bank had to waive the annual fee to make them want to keep it!
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  • eminere

    eminere

    9 Aug, 2017 11:19 pm

    And there's no problem with that.
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  • Bob Burgess

    Bob Burgess

    9 Aug, 2017 09:44 am

    Right on! I ditched my CommBank plastic earlier this year and swapped it for an Amex Platinum card, it's much better value in every way. Still have some family members who are hold-outs and just don't realise what a crock this CBA card is, so I'll send them links to this article and maybe the penny will finally drop.

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    David Robertson

  • Steve

    Steve2001

    9 Aug, 2017 09:46 am

    Thanks for the great article as always a Chris and for crunching the numbers on the points. Like many other cardholders, I only keep it around because it's free. The no-spend travel insurance and international fee-free Amex transactions are handy too. But I would definitely not pay $395 a year for it. At that price bracket it's one of the worst value credit cards out there imho. 
    Member who gave thanks

    David Robertson

  • David Robertson

    David Robertson

    9 Aug, 2017 09:49 am

    Top article, AusBT is always good for highlighting the 'best' cards so it's great to also see one of the very worst cards called out too. I don't know why so many people have a Comm Bank credit card but every savvy frequent flyer knows they are rubbish and we keep telling everybody else that too!
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  • Drinazz

    Drinazz

    9 Aug, 2017 09:59 am

    Chris,

    A little bit unfair to CBA (I don't work for them and I am not their biggest fan).  Sure, if you want to burn points for upgrades then you have to convert to QFF or Velocity, however if it is just flights you are after, the best rate of return if to cash them in at Flight Centre.  Not only can you choose any flight on any airline, if you don't have enough points for the entire flight you pay a portion of the cost with your CBA Awards points.  Flight Centre also regularly offer attractive bonus point deals on redemptions.

    As mentioned by other posters, many CBA customers have the fee waived (even for Diamond) with their mortgage as part of the CBA Wealth package which comes with a discount on your loan interest rate also.
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  • Chris Chamberlin

    ChrisCh

    9 Aug, 2017 10:31 am

    Hi Drinazz, we're comfortable with our article, and also find CBA's conversion rate of 186 CBA Awards points to $1 at Flight Centre to be poor.

    For example, to 'purchase' a $139 flight (let's say Sydney-Melbourne) through Flight Centre, you'd need 25,854 CBA points: plus more points (or cash) to cover Flight Centre's booking fees which are levied on top.

    Convert those same points to Velocity from CBA Platinum or Diamond and you'd have 12,927 points, which is actually enough to book a longer route like Melbourne-Brisbane (or for Sydney-Melbourne, would leave around 5,000 Velocity points remaining in your account), with a payment of ~$20 on the side to cover taxes and fees. For business class, the Flight Centre route is less competitive again due to the pricing difference between business class fares and economy.

    (That's also not to mention that to earn those 186 CBA points for the $1 credit at Flight Centre, you'd need to spend $372 on the Diamond AMEX at the majority of merchants. Spend the same amount on cards like AMEX Explorer or AMEX Velocity Platinum and you'd have the equivalent of 558 Velocity points, which goes much further towards your trip.)

    Members who gave thanks

    David, Greg84

  • grov

    grov

    9 Aug, 2017 02:49 pm

    Think I've mentioned that my annual fee is $195, presumably because I never let my Diamond card go negative. As I only use the Amex card for large or international purchases, I'm reasonably happy with the points accrual, and now I don't pay int. transaction fees.
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  • P1

    P1

    9 Aug, 2017 02:53 pm

    Yet another CBA scandal!

    I guess they have to try and claw back all those fines and CEO bonuses somehow!

    No member give thanks

  • bl812

    bl812

    9 Aug, 2017 03:13 pm

    this is the duschbag bank of australia while they just announced a 10 billion profit by supporting money laundering etc they also the worst for rewards come on people get rid of them!
    No member give thanks

  • flyOFTEN

    flyOFTEN

    9 Aug, 2017 03:18 pm

    the worst part of the CBA are that they now are the bankers for drug dealers. Who's worse the drug dealers or the bankers ? Time to reintroduce rule 303 (not by govt by the people)
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  • George Koperski

    RUR83

    9 Aug, 2017 03:41 pm

    Fee free card because of the CBA Wealth Package ?
    One pays an annual fee for the privilege of (what a coincidence) $395 ! 
    Initially the Wealth Package was fee free, but the fee has been introduced a number of years ago.
    No member give thanks

  • Ken Endacott

    bigken

    9 Aug, 2017 04:28 pm

    The problem with the idea of keeping the free CBA card that comes with a mortgage and getting a better card from someone else is that when applying for a card the limits on all cards are added up and used to determine eligibility. Providers are getting very tough on who they give cards to. I have been knocked back despite a respectable income, low debt etc.

    I wonder if cutting back the limit on the CBA card to something like $1000 would still keep the benefits.
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  • Chris Chamberlin

    ChrisCh

    9 Aug, 2017 04:32 pm

    CBA (like most credit card issuers) has minimum credit limits on its above-basic cards, so you can't drop the credit limit below a minimum of $12,000 for Diamond, $5,000 for Platinum and $2,500 for Gold.

    Slightly different rules apply if you already have one of those cards and the limit is already below that amount (or if you have an older-type account with a Visa instead of a Mastercard), but you can't lower the limit on a Diamond card from $20,000 to $1,000, for example: you could only lower it from $20,000 to $12,000.
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  • scibo10

    scibo10

    17 Aug, 2017 08:58 am

    Hi Chris

    The minimum credit limit for the Diamond card is actually $15,000, which is quite high if you're only using the card for its free travel insurance and overseas transactions.  Like bigken notes, as reporting agencies and banks get better at identifying total credit limits for cardholders, this could become a problem when applying for better earning cards.  
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  • Chris Chamberlin

    ChrisCh

    17 Aug, 2017 09:28 am

    Scibo10: We've confirmed with CBA that the minimum credit limit on the Diamond Awards as it's issued today (AMEX + Mastercard) product is indeed $12,000, not $15,000.

    Some longer-term customers who chose not to migrate from Visa to Mastercard as part of that combo a number of years back instead have a minimum credit limit of $15,000 on the account, but could reduce that to $12,000 by switching the Diamond Visa for a Diamond Mastercard and then lowering their limit.
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  • scibo10

    scibo10

    17 Aug, 2017 09:42 am

    Hi Chris

     
    That's good to know, as I'm on $15,000 and would like to decrease. I also have a Mastercard not Visa.  
     
    Bit confusing though, becasue if you go to their website, it states a minimum credit limit of $15,000.  
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  • melb_matt

    melb_matt

    9 Aug, 2017 04:43 pm

    Also, if you're on the CBA Wealth Package for the fee free credit card, you're not only paying for that card through the $395 annual package fee, you're also well and truly paying for it through CBA's hefty interest rates. 

    If your mortgage rate doesn't start with a 3 you're paying too much (potentially thousands of dollars a year) just for the privilege of borrowing from one of the big 4...
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  • lm1

    lm1

    11 Aug, 2017 12:03 am

    So very true... talk to someone, a mortgage broker, anyone, and get a better deal... we did, and we ended up with better credit card for free from the resulting bank! It's well worth the discussion.
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  • mjduckby89

    mjduckby89

    9 Aug, 2017 05:40 pm

    A good summary, though this article misses the broader point: following the changes in the interchange regime by the RBA, all banks have reduced and capped interchange income on American Express cards, which is why bank-issued American Express cards are no longer competitive in their points earn rates. I'd question why CommBank was singled out - the argument applies equally to all bank-issued American Express cards.
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  • Chris Chamberlin

    ChrisCh

    9 Aug, 2017 05:59 pm

    NAB offers up to 1 frequent flyer point per dollar spent via AMEX as a general earn rate, while Westpac offers up to 1.25 frequent flyer points per dollar of everyday spend via AMEX. CBA tops out at 0.2 Qantas Points and 0.25 Velocity points on everyday spend as we've highlighted, which is one fifth to one sixth as many points as the other banks are offering on normal AMEX spend.

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  • David Robertson

    David Robertson

    9 Aug, 2017 05:59 pm

    It seems like CommBank credit cards are acceptable value as long as the bank drops the annual fee! Not much of a business for them though!
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  • traveller99

    traveller99

    9 Aug, 2017 06:15 pm

    Currently living overseas so I put everything on my CBA Diamond AMEX. Wonder if CBA will get p'd off at that and consider it excessive use? 1.2 QFF per international dollar spent is great value, considering there's no international transaction fee. And the exchange rate I get is the same I'd get with Mastercard ie the rate you see when you do a Google currency conversion search.
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  • 140K

    140K

    10 Aug, 2017 11:28 am

    I think you may find you are earning 0.5 awards points per $A, or 0.2 QFF per dollar. But the saving on international transaction fees is indeed worthwhile.
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  • Chris Chamberlin

    ChrisCh

    10 Aug, 2017 11:33 am

    140K: International transactions are one of the few categories where CBA actually provides a respectable number of points. Almost everywhere else in Australia, though, the earn rate is as you say.
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  • 140K

    140K

    10 Aug, 2017 12:32 pm

    Thanks for that correction ChrisCh, I can now see that in the blurb. I spent a few thousand overseas last month so will be delighted to get 3 awards points per $A.
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  • ALDO vAN hEESWIJCK

    boris45

    9 Aug, 2017 06:28 pm

    I have a fee free CBA Black card which used to give reasonable QF points and a high credit limit. Not anymore. I will still use it overseas but have obtained an AMEX Platinum card for local use, but its credit limit is currently to low for some transactions.
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18 Aug, 2017 09:12 am

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