Pitfalls, Protections and Official Sources
Points expiry, devaluation and cancelling a rewards card without losing value
How credit card and frequent flyer points can expire or lose value in Australia, what to do when a program changes, and how to cancel or downgrade a rewards card without forfeiting points.
Credit card points can lose value in three ways: they can expire (after a set time or a period of account inactivity, depending on the program), they can be devalued when a program raises the points needed for rewards or lowers earn rates or transfer ratios, and they are usually forfeited when you close the card. To protect their value, redeem regularly rather than hoarding, transfer bank points to a program you will use only when you have a redemption in mind, and redeem or transfer everything before cancelling or downgrading. Cancelling itself is easy: Australian law requires card issuers to provide an online way to close a credit card and to act on your request without trying to talk you out of it.
This guide belongs to the pitfalls, protections and official sources section. It is general information, not legal advice.
How points can lose value
| Risk | What happens | How to protect yourself |
|---|---|---|
| Time-based expiry | Points expire a set period after they are earned | Track expiry dates in the program account; redeem older points first |
| Inactivity expiry | Points expire if there is no earning or redemption activity for a period | Earn or redeem at least occasionally, as defined in the terms |
| Closure forfeiture | Points held in a bank program are lost when the card account closes | Redeem or transfer before closing |
| Devaluation | Program changes how many points rewards cost, or how many you earn | Do not stockpile for years; redeem for known needs |
| Transfer ratio changes | Bank to airline conversion becomes less favourable | Transfer when you have a booking in mind, not speculatively |
| Rewards restructure | Issuer changes the card's earn rate, caps or fees | Re-run the annual fee calculation when notified |
Expiry and change rules are in the rewards program terms, which are separate from the credit contract. Issuers and programs usually reserve the right to change the program with notice; read how much notice they give.
Devaluation in numbers (illustrative)
You hold 100,000 points. A reward you want costs 80,000 points today. The program announces that from next quarter the same reward will cost 96,000 points, a 20% increase.
- Value per point today, if the reward replaces a $900 cash purchase: $900 ÷ 80,000 = 1.125 cents.
- After the change: $900 ÷ 96,000 = 0.94 cents.
- Value of your 100,000 points: falls from about $1,125 to about $940.
Redeeming before the change, if you would make that booking anyway, protects about $185 of value. Rushing into a redemption you do not need does not.
Why rewards may change in 2026
From 1 October 2026 the Reserve Bank's lower interchange caps on domestic credit cards reduce income that has helped fund rewards programs. The RBA has said some institutions have announced changes to rewards, pricing and benefits. If your issuer notifies changes, compare the new terms with alternatives using the rewards value vs annual fee calculator. See the surcharging and interchange guide.
Before you cancel or downgrade: a checklist
- Check your points balance and any pending points, including sign-up bonuses not yet credited.
- Redeem or transfer points. If transferring to an airline program, confirm the transfer has arrived before closing.
- Move recurring payments (subscriptions, insurance, utilities) to another card or account.
- Pay the balance, or plan how the remaining balance will be paid. Closure stops new spending; the debt remains.
- Check timing against the annual fee. Some issuers may refund part or all of a recently charged fee if you close soon after, depending on terms; ask.
- Ask about a product change if you want to keep the account but lower the fee. Note that a product switch may move points into a different program or forfeit them; ask first.
- Request closure online, as the law requires the issuer to allow, and save the confirmation.
- Check your next statement and credit report to confirm the account is closed.
Your legal rights when closing
Under Part 3-2B of the National Consumer Credit Protection Act 2009, a credit card contract must allow you to terminate it (section 133BT), the issuer must provide an online way to request termination (section 133BU), must not suggest you keep the card (section 133BV), and must give effect to your request (section 133BW). The same applies to reducing a limit. See credit limits, reducing and cancelling.
The law does not require an issuer to let you keep bank points after closure; that is a matter for the program terms.
Worked example: closing a premium card (illustrative)
Pat's premium card charges $395 a year. Pat's spending has fallen to $15,000 a year, earning about 15,000 points worth around $150 at 1 cent each. The fee renews in three weeks.
- Keeping the card: about $150 − $395 = −$245 a year.
- Pat has 42,000 points. Transferring them to an airline program and booking a planned domestic flight uses 36,000 points; the remaining 6,000 are redeemed for a $30 gift card.
- Pat closes the card online before the renewal date and moves spending to a no-fee card.
Saving: about $245 a year, with the points value preserved.
Frequently asked questions
Are frequent flyer points lost if I close the credit card?
Points already transferred into an airline program generally stay in that program under its own rules. Points still in the bank's own program are usually forfeited on closure. Check both sets of terms.
Can points expire while I still hold the card?
Yes, if the program has time-based or inactivity expiry. Some bank programs say points do not expire while the account is open and in good standing; check yours.
What if the program changes the rules after I earned the points?
Programs generally reserve a right to change terms with notice. If you think a change was unfair or not properly notified, complain to the issuer, then AFCA for the card, or the ACCC for consumer law concerns.
Is a downgrade better than closing?
It can keep your account history and some rewards at a lower fee, but check what happens to your points and whether the new card's numbers work.
Sources and where to check
- Federal Register of Legislation — National Consumer Credit Protection Act 2009, sections 133BT to 133BW
- Australian Competition and Consumer Commission — loyalty schemes and consumer rights
- Reserve Bank of Australia — interchange decision and effects on cardholders
- Australian Financial Complaints Authority — complaints about card issuers and rewards
