As a frequent flyer, you’ve likely mastered the art of racking up points for that dream business-class flight to Europe or a quick getaway to Bali. But a new proposal from the Reserve Bank of Australia (RBA) to ban credit and debit card surcharges and slash interchange fees by July 2026 could shake up how you earn and redeem those precious frequent flyer points.
The RBA’s Big Move: What’s Changing?
The RBA’s recent consultation paper, as reported by news.com.au, aims to eliminate the $1.2 billion in annual surcharge fees Aussies pay when tapping their cards for purchases on eftpos, MasterCard, and Visa. This goes beyond the government’s proposed debit card fee ban, aligning Australia with global markets like the UK and EU, where surcharges are less common. The RBA also plans to lower interchange fees—the costs merchants pay to process card transactions—which could save businesses another $1.2 billion annually. While this sounds like a win for consumers, the ripple effects could hit frequent flyer programs hard.
Why Frequent Flyers Should Care
If you’re someone who swipes a high-earning credit card like the Qantas American Express Ultimate (1.25 points per dollar) or the Citi Premier Card (up to 2 points per dollar) to fund your travels, these changes could make earning points tougher. Interchange fees are a key revenue source for banks, which use them to fund generous rewards programs, including frequent flyer points. When these fees drop, banks may tighten their belts by:
- Cutting Points Earn Rates: After the RBA’s 2017 interchange fee cap, banks slashed points rates and sign-up bonuses. Experts like Matt Graham from Australian Frequent Flyer predict similar moves in 2026, with earn rates potentially dropping to UK levels (often less than half of Australia’s current rates).
- Raising Card Fees: High-rewards cards already carry hefty annual fees—think $450 for the Qantas Amex Ultimate. Banks might hike these fees or scale back perks like lounge access or travel insurance to offset losses.
- Smaller Sign-Up Bonuses: If you “churn” cards for bonuses (e.g., 110,000 Velocity Points for $8,000 spend on Citi Premier), expect stricter eligibility or lower offers.
For travellers, this means you might need to spend more or wait longer to earn enough points for that Sydney-to-London flight. With less generous rewards, some might even switch to debit cards or cash, further limiting points-earning opportunities.
Will Award Seats Get Pricier?
Points inflation—where more points are needed for the same redemption—is a real concern. Airlines like Qantas and Virgin Australia sell points to banks, and with lower interchange fees, banks may buy fewer points, squeezing airline revenue. To maintain profitability, airlines could raise the points required for award seats. For example, Qantas recently bumped long-haul business-class redemptions from 108,600 to 130,100 points each way starting August 2025, a sign of things to come. The RBA notes merchants might raise prices to absorb processing costs, which could push up “Classic Plus” award rates tied to cash fares, especially for economy flights.
However, premium cabin redemptions, like Qantas’ Emirates business-class flights, might stay competitive to keep loyal customers hooked. Round-the-world awards (e.g., 280,000 points for business class) could remain a sweet spot despite higher points costs.
What Airlines Stand to Gain or Lose
Frequent flyer programs are cash cows for airlines—Qantas’ program alone is a multi-billion-dollar business. The surcharge ban could save travellers $1.2 billion, making award bookings more appealing by cutting out-of-pocket costs (e.g., $35 surcharges on Brisbane-Sydney flights). Airlines might also roll out new redemption options, like Qantas’ upcoming Hawaiian Airlines awards or Velocity’s spend-based status credits, to keep members engaged.
On the flip side, reduced bank revenue could mean fewer points sold to airlines, hitting their bottom line. If points become harder to earn or less valuable, travellers might disengage, weakening loyalty. Higher merchant prices could also increase airline operating costs, potentially leading to higher redemption rates or carrier surcharges.
Tips for Frequent Flyers
So, how can you stay ahead? Maximize points now by leveraging sign-up bonuses or high-earn-rate cards before the changes hit. Redeem for high-value awards, like premium cabins or partner airlines, to get the most bang for your points. Consider flexible programs like American Express Membership Rewards, which transfer to multiple airlines, to hedge against devaluations. Finally, keep an eye on airline innovations—new partnerships or redemption options could keep your travel dreams alive.
The RBA’s proposal promises savings but could make your frequent flyer journey bumpier. Plan smart, and you’ll still be sipping champagne at 30,000 feet.
