The Commonwealth Bank has announced its reductions in card earn rates as from July, 2017. For a given cardholder, the actual change will kick from their statement date in July.
The bank joins the ranks of ANZ, NAB and Westpac that have all announced a round of cuts for July. As with NAB and Westpac, Commonwealth Bank has elected to retain the American Express companion cards. As a result, it is only the ANZ that is discontiuing its American Express cards at this point.
Commonwealth Bank Changes
Broadly, the changes made by Commonwealth are as follows:
- Reduction of the basic earn rate on American Express companion cards
- Introduction of a higher earn tier. American Express spend at Department Stores, Supermarkets and Petrol Station will earn at a higher rate
- International Spend with the American Express card will also earn at the higher rate.
- Changes to the way Point Caps operate
The reduction on the earn rate on the American Express card has an interesting side effect. In some cases, it will be more rewarding to use the Visa or Mastercard than the American Express card. This will often be the case when using the card outside the higher rate merchants.
The new Earn Rates
The earn rates are show in the following table. The earn rates shown are in the Commonwealth Rewards currency, prior to conversion to a Frequent Flyer scheme.
When converting to Velocity or Qantas Points, you will earn at the converted points rate. For Velocity, you need 2 Rewards Points to convert to 1 Velocity Point. In the case of Qantas Points, it take 2.5 Rewards Points to get 1 Qantas Point.
| Card | Visa or Mastercard |
American Express Earn Rate |
Points Cap
(Award Points per year) |
|---|---|---|---|
| CBA Diamond Awards | No Change
1.25 Points per Dollar |
Current: 3 Points per Dollar
New Basic: 0.5 Points Per Dollar New Higher: 3 Points Per Dollar |
1,000,000 |
| CBA Platinum Awards: | No Change
1 Point per Dollar |
Current: 2.5 Points Per Dollar
New Basic: 0.5 Points per dollar New Higher: 2.5 Points per dollar |
150,000
or 120,000 if opted into Qantas Points |
| CBA Gold Awards | No Change
1 Point per Dollar |
Current:2.0 Points per Dollar
New Basic: 0.5 Points per dollar New Higher: 2 Points per dollar |
75,000
or 60,000 if opted into Qantas Points |
| CBA Awards | No Change
1.0 Point per Dollar |
Current: 1.5 Points Per Dollar
New Basic: 0.5 Points per dollar New Higher: 1.5 Points per dollar |
50,000
or 30,000 if opted into Qantas Points |
As can be seen in the table, the standard American Express earn rate will be even worse than the Visa or Mastercard rates. It is even worse to think about it if Frequent Flyer terms. An earn rate of 0.5 Commonwealth Rewards points per dollar equates to an earn rate of just one quarter of a Velocity point, or one fifth of a Qantas Point.
International Transaction Fees
It’s not all bad news. From July 1, Commonwealth Bank will no longer charge International Transaction Fees on the Platinum and Diamond Rewards American Express cards. Together with the higher earn rate on international spend, this may make the American Express companion card more useful while travelling abroad.
