Commonwealth Bank axes American Express credit cards

By Chris Chamberlin, June 6 2018
Commonwealth Bank axes American Express credit cards
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EXCLUSIVE | The Commonwealth Bank will stop issuing new American Express credit cards later this year and will cancel all existing CBA American Express cards in Australia before year's end.

All current customers will find their CommBank Awards American Express cards disabled from November 1 2018, meaning all CBA AMEX transactions will be declined from that date.

This applies to both personal and business credit card holders, so whether your card is Standard, Gold, Platinum or Diamond, issued directly to you or via your business, if it's a Commonwealth Bank American Express card, you won't be able to use it come November.

Internal Commonwealth Bank documents sighted by Australian Business Traveller outline the bank's plans, which CBA has since confirmed.

To continue earning points in the Commonwealth Awards program, you'd need to revert to the 'backup' Mastercard also provided as part of your CBA credit card account – or the backup Visa, if you're a long-time customer and haven't changed your card type in many years, which will become your only CBA credit card.

New customers applying for the bank's various Awards credit cards will still receive a new AMEX card, plus a companion Mastercard, if their application is received and gets final approval by August 31 2018 – but from November 1, those AMEX cards will be still disabled, as with all CBA AMEX products.

Customers applying for new CBA Awards credit cards on and from September 1 2018 will receive a Mastercard only, and will not be able to request an American Express card.

The same is true for existing cardholders migrating from one CBA credit card to another from September, as their new card will be Mastercard-only.

In related news, the bank has also axed its personal Gold Awards AMEX + Mastercard credit card combo for new customers, who can only now apply for Standard, Platinum and Diamond Awards accounts.

Why is CBA ditching its American Express cards?

According to internal Commonwealth Bank documents sighted by Australian Business Traveller, the shutdown stems from the Reserve Bank of Australia's decision to cap interchange fees for bank-issued American Express cards to the same rate as Visa and Mastercard.

Read: How the interchange cap will affect credit card frequent flyer points

Banks traditionally issued American Express cards to customers because businesses paid higher fees to process these payments: and a portion of those fees were passed along to the banks to help fund higher frequent flyer points earning rates on AMEX transactions, compared to traditional Visa and Mastercard purchases.

Now, with bank-issued AMEX cards providing no extra revenue per transaction than a Visa or Mastercard, there's no incentive for banks to continue issuing these cards alongside Visas and Mastercards, with ANZ, NAB and Westpac all having ditched their direct-issued AMEX cards, although Westpac has recently introduced Westpac-branded AMEX cards issued directly by AMEX, which aren't subjected to interchange fee caps.

"This (RBA) change affects the ability of banks to reward AMEX credit card customers with higher Awards points earn," CBA's document explains.

"We regularly review our product offerings and have made the decision to close our AMEX companion credit cards from Thursday 1 November 2018," a spokesperson for the bank told Australian Business Traveller, which mirrors the information distributed to CBA employees today.

CBA is advising its customers of the withdrawal of AMEX cards next week and will provide them with similar information to help them manage the change, the spokesperson shared.

“The RBA’s regulatory changes introduced in July last year created widespread disruption of the digital payments landscape with banks choosing to either devalue their rewards programs or remove the American Express companion cards," an American Express spokesperson told Australian Business Traveller.

While "Commonwealth Bank American Express companion cards will close on 1 November 2018... American Express’ other commercial arrangements with Commonwealth Bank will continue", the spokesperson added, such as the Simple Merchant Plan for small businesses which makes it easier and more affordable to accept AMEX.

What now for CBA American Express cardholders?

Firstly, as all existing CBA AMEX cards will be cancelled come November 1, if you currently have any direct debits or other automatic payments being charged to your CBA American Express card, you'll need to move these payments onto a different card before that date, as all CBA AMEX transactions will be declined from November 1.

Don't forget about services which store your credit card number for use, either – card details on platforms such as PayPal and Uber will also need to be updated.

The Commonwealth Bank has confirmed to Australian Business Traveller that it will not be reducing annual fees charged on any of its Awards products in light of this change, nor will it be increasing the number of points awarded on Mastercard spend.

Commonwealth Awards points which have already been earned can continue to be spent even after American Express cards have been closed, which for most savvy card users means converting them into Velocity Frequent Flyer points with Virgin Australia (Qantas Points are an option too, but are credited to your account monthly, not manually transferred).

But as we've previously highlighted, CBA cardholders already earn more frequent flyer points per dollar spent under the current two-card program by using their Mastercard for most purchases, not their American Express card, which actually has a lower earn rate except in a few bonus categories like department stores and overseas spend.

Read: CBA's credit cards among the country's worst for earning frequent flyer points

With bank-issued American Express cards coming to a close, the only American Express cards remaining in the market will be those issued directly by American Express, which offer some compelling frequent flyer earning rates.

For Qantas frequent flyer points, the Qantas American Express Ultimate card offers 1.5 Qantas Points per $1 spent, plus 55,000 bonus Qantas Points. There's a $450 annual fee, but that's offset by the inclusion of a $450 Qantas Travel Credit every year to spend on Qantas flights – so if you'd have spent that much on flight bookings anyway, the card is practically free.

Spenders preferring Virgin Australia Velocity frequent flyer points could instead look to the AMEX Velocity Platinum credit card, providing a similar earn of 1.5 Velocity points per $1 spent, 50,000 bonus Velocity points for new customers, a free return domestic flight with Virgin every year and airport lounge visits, aside a $375 annual fee.

Another option for Velocity points or for miles in popular overseas programs like Singapore Airlines KrisFlyer, Cathay Pacific Asia Miles and Emirates Skywards is the AMEX Explorer credit card, giving the equivalent of 1.5 frequent flyer points per $1 spent through AMEX's Membership Rewards program, with the $395 annual fee offset by a $400 travel credit (travel voucher) every year.

Disclaimer

Executive Traveller may receive a commission when you apply for these credit cards via our links.

You should seek independent advice and consider your own personal circumstances before applying for any financial product.

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller, and lives by the motto that a journey of a thousand miles begins not just with a single step, but also a strong latte, a theatre ticket, and later in the day, a good gin and tonic.

13 Apr 2018

Total posts 14

That’s really sad, I’m disappointed. I loved the Amex card for the no exchange fee when spending overseas.

Wonder what other cards will allow no exchange fees?

Hi Nichokiu, some options for earning points overseas without bank-imposed transaction fees include Bankwest's Qantas Platinum and World Mastercards and the Coles Rewards Mastercard (earns Flybuys which convert to Velocity). The 28 Degrees Platinum Mastercard is also a popular 'no fee' card for use overseas but doesn't offer any points.

Virgin Australia - Velocity Rewards

20 Nov 2017

Total posts 104

Can recommend 28 Degrees mastercard.

03 Nov 2014

Total posts 91

Only downside of 28 Degrees is no points - the CBA Amex was good for no FX Fees & Points

And you can put the 28deg card in your phone's wallet and use Applepay. CBA is still dragging the chain with STILL no Applepay so I find I am using their cards less and the 28deg card more - particularly with the current 5% cashback promotion.

04 Jun 2018

Total posts 2

I recommend ANZ travel rewards for: a) no FX fees, and b) points-earning potential. Annual fees of $225 is somewhat offset if you utilise the complimentary return domestic flights. I usually apply for this card just before an overseas trip, then cancel it once I'm home in order to reset my bonus points eligibility period (after booking my flights, of course!).

Qantas - Qantas Frequent Flyer

10 Dec 2014

Total posts 55

There goes my access to the Amex lounge at Melbourne Airport ☹

Virgin Australia - Velocity Rewards

26 Nov 2017

Total posts 14

Such a shame. Will start to seek out an alternative. My business banks with CBA and to be honest they offer so little on both a buisness and personal banking front these days I wonder why I use them. We never see our business banker (forgotten his name!), yet we have millions in trust at any one time. To me this is another reason why we should widen our perspective away from the big four. Open banking is the way forwards. Sorry for the rant.

24 Apr 2014

Total posts 273

I'm amazed you got access to Internal bank documents!

Delta Air Lines - SkyMiles

16 Oct 2017

Total posts 96

Fell off the back of a truck, probably...

Qantas - Qantas Frequent Flyer

05 May 2017

Total posts 17

I am impressed too haha

lind26: All part of the job, with thanks to our confidential sources (and of course, new sources are always welcome, and my email inbox - [email protected] - is always open for tip-offs. We never reveal sources who choose to remain confidential, but perhaps don't use your work email address or computer to send something 'top secret', for obvious reasons!).

03 Nov 2014

Total posts 91

Has to be the worst premium card on the market - pretty sure 95% of people that have it get it included on the home loan package (you'd be mad to pay for it) - very disappointing from CBA

Virgin Australia - Velocity Rewards

13 Jan 2015

Total posts 593

Yea CBA have the worst points earning cards with no bonus or any other incentive to even bother with them.

Virgin Australia - Velocity Rewards

20 Nov 2017

Total posts 104

Yes, exactly. Comes with the CBA wealth package, and I never use mine.

04 Jun 2018

Total posts 2

Agreed - stopped using my CBA cards a long time ago. I only pull it out during Amex's shop small or other statement credit promos. CBA could have at least cancelled the amex card on Nov 30, after shop small. Nov 1 cancellation is just cruel

Qantas - Qantas Frequent Flyer

05 May 2017

Total posts 17

The card went to the pack after the rewards slashing last year. The only good thing left with it was the exchange fee free on international payments. I can see why they are ditching it though.


If it wasn’t for their amazing online platforms I doubt I would still use CBA. Credit cards with other banks offer much better value with their rewards!

Etihad - Etihad Guest

02 Mar 2018

Total posts 10

Just cancelled my diamond awards card. Have had it about 7 years or so. The frequent flyer rates were no longer competitive. Now have Velocity AMEX and ANZ Black. Think I'll just change cards every year for the bonus from now on.

VA

17 Jun 2014

Total posts 15

Glad to see I'm not the only one going down this path!

02 Dec 2016

Total posts 32

Surprised it took them this long compared to other banks e.g. ANZ.

Singapore Airlines - The PPS Club

11 Sep 2015

Total posts 26

Like others used it only for avoiding extra fx charge when travelling internationally. Pity can't do same with my Velocity Amex. If it wasn't for CBA's damn good net banking I'd probably ditch 'em altogether.

Qantas - Qantas Frequent Flyer

07 Mar 2015

Total posts 9

I'm surprised that no ABT subscriber has raised the issue of whether we'll get a prorate refund from CBA when our AMEX cards are cancelled. My annual fee on a CBA Diamond card was around $400 p.a. and will still have a long time to run when it is arbitrarily cancelled in November. Surely we are entitled to a partial refund ???

Singapore Airlines - The PPS Club

11 Sep 2015

Total posts 26

Good point. Fair trading comes to mind. Have you asked them?

30 Sep 2018

Total posts 1

I'm very dissapointed because i want to have that credit card but they banded it and a coles credit cardd you can get


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