The Surcharge Ban Starts 1 October. Your Rewards Card Changes the Day Before.

Card surcharges disappear on 1 October. The day before, on 30 September, Westpac and St.George reprice their rewards credit cards. The variable purchase rate goes from 20.99% to 23.99% a year, annual program fees of $75 land on cards that carry none today, and a $100 gift card that costs a St.George holder about 20,000 Amplify points starts costing about 29,412.

Both issuers give the same reason on their own change pages: the Reserve Bank has introduced changes to credit card rules in Australia. The Payments System Board published its final decisions in March. From 1 October the RBA lifts its prohibition on no-surcharge rules, ending surcharging on the designated eftpos, Mastercard and Visa networks, and cuts the interchange cap on domestic-issued consumer credit card transactions to 0.3 per cent of transaction value.

What it means

Interchange is the fee a merchant's bank pays the cardholder's bank on every transaction, and it is what pays for points. Cut it to 0.3 per cent and the rewards program has to be funded some other way. That is why the fee, rate, earn-rate and redemption changes arrive on one date.

Across the six Westpac Altitude and four St.George Amplify cards affected, the variable purchase rate rises from 20.99% to 23.99% a year and the cash advance rate from 21.99% to 23.99%. The minimum payment due moves from 2% of the closing balance or $10 to 2.5% or $25, whichever is greater. St.George also cuts the interest free period from up to 55 days to up to 45, and moves the payment due date 10 days earlier.

The annual rewards program fee is where free cards stop being free. Westpac's Altitude Rewards Platinum and Rewards Black go from $0 to $75, Altitude Qantas Platinum from $75 to $125, and Altitude Qantas Black from $75 to $155. The St.George Amplify range moves on the same ladder, $0 to $75 at the bottom, $75 to $155 at the top.

Then the points buy less. A $100 eGift card moves from about 23,500 Altitude points to about 29,412, and from about 20,000 Amplify points to that same 29,412. A $100 St.George fee rebate goes from about 18,000 points to about 30,900. Dining drops out of St.George's Everyday Spend category into the lower All Other Purchases rate.

Why it landed on the personal card

The Board cut the consumer credit card interchange cap to 0.3 per cent. It retained the commercial credit card cap at 0.8 per cent. Read the change pages against that and the pattern is exact: the cards on both lists are personal, and Westpac's business Altitude range is not on either. The repricing follows the interchange cut, which was written to fall on the consumer side.

What to do

You have about five weeks to work out what the card is worth, and your own statements are where to do it. Take your last 12 months of spend, apply the new earn rates category by category, value it at the new redemption rate and subtract the new program fee. Below zero, and the card is a cost of habit.

If you carry a balance, three things change and only one is the rate. The purchase rate at 23.99% is the visible one. The minimum payment floor at 2.5% or $25 raises what has to leave your account each month. For Amplify holders the due date moves 10 days earlier, so a direct debit set to the old date will land late. Reset it in September.

Business owners have a second question. Where business spend sits on a personal rewards card for the points, the points are what has been repriced. Price the same spend on a commercial card, where the interchange cap is unchanged, and see whether the personal card still wins. If you take card payments, from 1 October you cannot surcharge, so your customers' card mix becomes your cost. Ask your acquirer for last quarter broken down by card type.

This article is general information only and is not financial advice.