Scrap the blender and go for the cabin upgrade: that’s the best way to get the most out of your points. Picture: Supplied

From July 1, many new and existing card holders can expect to see a revamp to the banks’ rewards programs, which may include reduced earn rates and limits on the kinds of transactions that attract points.

ANZ, Commonwealth Bank, NAB, Westpac, St George, Citibank and the Bank of Melbourne have already announced changes to their card portfolios, and other changes are expected to be reported closer to July 1.

finder.com.au’s points guru Angus Kidman said the points changes were a response by the banks to interchange fee regulations that take effect next financial year and will cap interchange fees at a much lower 0.8 per cent.

“The practical impact of this is banks are going to make less money on these cards than they used to, and the way they’re dealing with that is by cutting the number of points they offer on their frequent flyer and rewards cards,” Mr Kidman told news.com.au.

“Essentially, banks purchase those points in bulk from airlines, so it costs them money, and now that they have less money, they’re going to buy less of them.

“The end result for the consumer is pretty much every card on the market is cutting in various ways the number of points you can earn.”

The glory days could soon be over for many credit card holders who rely on rewards points. Picture: Tim HunterSource:News Limited

American Express won’t be directly impacted by the interchange fee regulations so it’s not expected to change earn rates on its cards.

The changes will not affect customers with stand-alone retail loyalty cards, such as Coles’ Flybuys cards and Woolworths’ Frequent Flyer cards.

SO WHAT CHANGES ARE COMING, EXACTLY?

finder.com.au has a detailed and constantly updating list of the cards affected and the various changes card holders can expect from July 1.

Mr Kidman said he expected more changes would be announced before the end of the financial year.

“Some banks have literally cut the number of points you can earn, compared to what you might have earned before,” Mr Kidman said.

“A lot of them have put caps in place, so they’ll say customers can still earn points but only on the first $3000 they spend, for example. That’s a big nuisance if you’re a bit of a points hog and you’re pushing everything through your card to earn points.

“And quite a few of them have changed where you can earn points. So previously, anything you might have spent on your card would earn you points, but now, it might only be with specific retailers or airlines.”

Mr Kidman said he expected to see many card holders rethink their accounts and shop around after the changes come into effect on July 1.

While it’s still not yet known what the best deals will turn out to be, he said there were a few key things consumers should keep in mind if they were considering switching to a new account.

ANZ is reducing the earn rates on seven of its cards, including the ANZ Rewards card, Rewards Platinum, Frequent Flyer credit card and Travel Adventures card. Picture: Carla Gottgens/BloombergSource:Supplied

One of them was to pay more attention to what banks will give you for signing up, rather than the earn rate.

“There are a lot of cards on the market and they’ll give you offers where you might get 100,000 bonus points immediately, or if you spend a certain amount of money in the first few months,” he said. “And that’s generally a lot higher number of points than you’re ever going to earn any other way.

“So if you’re focusing on points, the first thing to do is to look for those bonus sign up offers because they’re actually going to be a much bigger deal than what you’ll continue to earn on the card, especially with all these restrictions coming through.”

But he warned that switching to new cards too regularly could have a negative impact on customer’s credit ratings, and some banks didn’t offer bonus points to existing customers.

He also said it was important to carefully consider the annual fees attached to cards, as customers should be getting enough value from the points to offset those fees.

BEST WAYS TO SPEND THE POINTS YOU DO HAVE

Now that it’s probably going to get harder to earn points than before, it’s time to get savvier about how you use the points you can get.

And the first golden rule is to spend your points on travel, rather than something like a watch or blender.

That’s because points represent different levels of value — a lot, or a little, bang for your buck — depending on what you buy with them.

“If you go down that path of shopping the online store and buying yourself a kettle or something, relatively speaking, you’ll get a really, really poor return on those points,” Mr Kidman said.

Scrap the blender and go for the cabin upgrade: that’s the best way to get the most out of your points. Picture: SuppliedSource:Supplied

“By far the most effective way to get the most dollar value from them is to use them for a flight upgrade, such as upgrading your economy seat to business class — especially an international flight, if you have enough points. You get the most return for your points that way, so that would be the top of my list.”

The second best option is to use points to book flights in the first place — especially for flights that need to be booked at the last minute.

“One of my strategies is that I always try to keep a pool of points that I can use if I need to book on short notice, such as if there’s a family emergency and I need to go somewhere,” Mr Kidman said.

“Because if you need to book a flight for the next day, that’s when you pay top dollar. But you can usually find a frequent flyer flight, and that’s good value because you can use your points for flights that are otherwise going to cost you $700 or $800 compared to if you had booked that flight well in advance.”

But if you’re doing this, it’s a good idea to pay with money for associated fees, such as airport taxes.

“In my experience it’s generally better value to just pay for the airport tax, than use your points, because often the large number of points they want (for those fees) is a really poor use of those points in actual terms,” he said.

And don’t forget that points can expire — so check the terms and conditions of your account and find out what you need to do to make sure they don’t suddenly disappear on you.