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Nicole helps ... see the value of rewards cards

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Hi Nicole, I read that Westpac is cutting the amount of points I can earn on my credit card. The article acted like this was all new but I remember when they did this last time. Where will it end and given I pay a big annual fee, is it still worth having a rewards card at all? I use my half Amex, half Mastercard card just to earn points, putting an average of $10,000 through them each month, and pay off the balance in full each month. Your advice would be appreciated. - Stephanie.

Ah Stephanie, if the article made out that Westpac is the only card provider to slash points, that's misleading too. I assume you're talking about the Big Four war on American Express points.

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Westpac was joined in the same week by NAB in chopping what's called the "earn rate" for points on the Amex companion cards that can massively boost your monthly points total by 17 per cent (from 3 points to 2.5 points) from July 1. Be grateful Westpac didn't cap the amount on which you can earn points; with NAB you'd be out of luck above $5000 (the new premium cards cap).

The Commonwealth Bank has already limited Amex points to overseas transaction and those at certain retailers and ANZ has scrapped dual cards altogether. Of CommBank's move, comparison site Finder.com.au notes: "While you could typically earn up to 3 points per $1 spent with American Express, you'll now earn a reduced earn rate unless you're shopping at 'high points merchants', such as supermarkets, department stores, petrol stations or overseas." 

It's all because of a crackdown set to hit on July 1 on the interchange fees banks receive from credit card companies. This will make Amex cards in particular a lot more expensive for banks to operate.

But leaving interchange – ahem – changes aside, credit card bells and whistles have come at a cost in general … far higher annual fees. In just five years, the average annual fee has spiked 15 per cent, to $118, says comparison website mozo.com.au. But rewards cards come at a hefty premium: $177 a year.

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What to do, Stephanie? You need to figure out the new dollar value of your points versus your annual fee. The percentage of spend you make on the Amex, as opposed to the MasterCard, will be key.

Assuming this is the average of 75 per cent, and that your product is the Altitude Black Card card, Mozo says your dollar return from July 1 will be $1557, down from $1892 (if you're redeeming your points for domestic flights).

I recommend checking how this compares with alternative offerings on Mozo's rewards revealer tool. But wait until the July 1 brazen new (credit card) world, as there are likely more changes to come.

Nicole Pedersen-McKinnon is a money educator and consumer advocate: themoneymentorway.com. You can write to her for help solving your money problem, or with a consumer question, at nicolehelps@fairfaxmedia.com.au.

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