The best value reward schemes for credit cards are the ones linked to frequent-flyer programs. "My biggest source of rewards is frequent flyer points," De Lorenzo says. "But with the lowering of the spending cap, even if I wanted to buy a car on my card I wouldn't get a free flight out of it." The cuts to rewards points on frequent flyer and general rewards programs are across the board with the banks cutting the rewards points on the Visa, MasterCard and Amex cards they issue. Credit cards not issued by the banks, such as a card direct from American Express, are not affected. Most of the cuts came into effect from the start of July this year.

The charges related to 24 different incidents in which credit cards were stolen. Credit:Jessica Shapiro The value of rewards for each dollar spent on credit cards has been declining for years, but it has taken an extra hit this year. Interchange fees The big banks blame the latest cuts on interchange fee regulations introduced by the Reserve Bank. The reforms impose a cap on how much the card companies can pay to banks for processing card payments.

Consumers pay these interchange fees through higher prices for good and services than they would otherwise pay. And there has long been a suspicion that the fees are more than the true costs of processing. The banks have used a large part of the revenue from these fees to pay for their rewards programs. Comparison site Mozo estimates that the average rewards card now delivers just $27 in annual value. That's based on the estimated average annual spend on a rewards card of $19,000. Rewards fall 63 per cent

It's a decrease in rewards credit card value of 63 per cent during the past 12 months. In 2016, Mozo calculated that the average net value delivered by rewards credit cards was considerably higher at $72 a year. "While a measly return may seem bad enough, the number of rewards credit cards delivering a negative net return on the average annual spend of $19,000 has jumped by 50 per cent over the past 12 months," says Kirsty Lamont, a director of Mozo. The number of cards where fees were more than the rewards value jumped from 30 cards in 2016 to 45 in 2017.

Card applications decline Analysis of credit card data from the Reserve Bank by comparison site Finder suggests the increase in the number of credit cards across Australia is slowing. The number of credit cards grew by an average of only 230 daily in the year to June 30, 2017, a huge drop from 1500 a day in each of the two previous financial years.



Bessie Hassan, money expert at Finder, suspects the uncertainty surrounding new interchange rules before July this year accounts in part for the fall in applications.



A recent Finder survey study found 43 per cent of people said they would be less likely to apply for a new rewards card if frequent-flyer programs continued to cut rewards earn rates.



However, Hassan says the main factor may be the closure of inactive accounts. "Often, banks will close inactive credit card accounts in bulk, and we have seen some big drops this year." she says. However, dampened consumer confidence may also be a factor.



Hassan says consumers are likely being more careful about getting into debt, given their already high levels of indebtedness.



With mortgage interest rates much lower than credit card interest rates, which are paid by those who don't pay off their card debt in full by the due date, some people are likely choosing to borrow against their homes.



"The average credit card rate is 17.15 per cent compared with the average mortgage rate of 5.08 per cent," she says. The trap there is that while the home loan rate is lower, it is repaid over a longer time. Unless people pay extra into the mortgage to compensate, they could pay more interest in dollar terms in the long run.

What to do Lamont says for the average spender, a no or low annual fee rewards credit card is likely to be the best option. "Premium rewards cards with huge annual fees are generally only useful for those spending $60,000 a year or more on their card," she says. Even though rewards points are no longer as plentiful as they once were, Mozo found that cards aligned with frequent-flyer rewards still gave the best rewards. "Domestic rather than international travel provides the best value for point expenditure," Lamont says.

Rewards credit cards continue to have significantly higher annual fees with the average sitting at $177, which is about four times higher than the average annual fee for non-rewards cards of $45, Lamont says. You should do your research and take note of the annual fee and the time limitation put on any vouchers or rewards you've earned, she says. And most importantly, always pay your balance in full each month. "Interest charges will far outweigh the benefit of any reward points you earn," Lamont says. Purchase interest rates

Mitchell Watson, the group manager of research and ratings at comparison site Canstar, says rewards cards purchase interest rates are higher than non-rewards cards. Figures from the Canstar database show an average interest rate on purchases of 19.5 per cent on rewards cards and 14.2 per cent for non-rewards cards. He says there are "vanilla" cards with purchase rates at low as 8 per cent for those with card debt they can't extinguish, who need to keep the amount they are paying in interest as low as possible. Rewards card often have extra features that can be attractive to some cardholders, Watson says. Among other features,they usually have more comprehensive travel insurance that frequent flyers may find valuable.

"The general concept on picking a rewards card has not changed," Watson says. "You still need to make sure it is one that is going to benefit you, given how much you spend and where you spend your money and how you repay your credit card. Loading "But the landscape has changed, which means that the card that you chose prior to July 1 may not be the best card for you now." Even if your card hasn't changed much, if your spending behaviour has changed, there may be a better card for you.