The Big Shift: Surcharges End, Banks Adjust
Australia has long been a country where paying by card could cost you extra at the counter. A coffee advertised at five dollars could suddenly become five dollars and twenty cents at the till, depending on the merchant's surcharge policy. That frustration is finally over. The Reserve Bank of Australia confirmed that from 1 October 2026, businesses can no longer add a surcharge for payments made on Visa, Mastercard and eftpos networks, across in-store, online and mobile wallet purchases.
The change is estimated to save Australian consumers a substantial amount each year, with official estimates pointing to around $1.6 billion annually. It also removes a layer of complexity that shoppers have complained about for years, where the price on the shelf rarely matched the price at the terminal. Amex operates outside this new rule, so merchants can still apply a surcharge to those transactions, worth remembering if you hold an American Express card.
Yet this reform has a side effect that matters to cardholders. Banks fund their rewards programs largely through interchange fees paid by merchants, and with those fees capped at lower levels, the big lenders are looking for the money elsewhere. Industry analysis suggests the changes could reduce bank revenues by around $660 million a year. In response, several major institutions have already announced higher annual fees, higher purchase rates and reduced points earn rates on selected cards, with many changes taking effect alongside the surcharge ban.
What This Means for Cardholders
The practical reality is that comparing credit cards in Australia has become more important than ever. It is no longer enough to glance at a sign-up bonus and assume you are getting a good deal. With annual fees rising and rewards shrinking, the value of any card depends heavily on how you use it.
For people who clear their balance in full each month, the interest rate matters less, but annual fees and the value of the rewards you earn matter a great deal. For those who carry a balance, the purchase rate is the single biggest factor, and it deserves far more attention than a pile of bonus points. The tricky part is that banks are changing products quickly, so a card that looked attractive at the start of the year may have different terms by now.
One useful way to frame the decision is by spending profile. A frequent traveller might prioritise Qantas or Velocity points, complimentary travel insurance and no foreign transaction fees. A family focused on grocery bills might prefer a supermarket-linked card that converts everyday spending into cashback or fuel discounts. A borrower carrying debt might be better served by a low-rate card or a long balance transfer window rather than any rewards program at all.
Consider the experience of a Melbourne-based professional who travelled to Sydney monthly for work. On an older rewards card she was earning points at a decent rate, but after her bank cut the earn rate and raised the annual fee, the card stopped paying for itself. She switched to a card with no foreign transaction fees and a better earn rate on travel bookings, and estimated her net benefit improved noticeably within a few months. Stories like hers are becoming common as banks reshape their lineups.
Comparing Your Options
A structured comparison helps cut through the marketing. The table below gives a snapshot of the main categories of credit cards available in Australia in 2026 and what each suits best.
| Card Category | Typical Annual Fee | Purchase Rate | Points or Perks | Best For | Watch Outs |
|---|
| Low Rate | Around $55-$99 | Lower purchase rates, roughly 12-14% p.a. | Few or no rewards | Carrying a balance month to month | No bonus points, limited perks |
| No Annual Fee | $0 | Higher purchase rates, around 20-22% p.a. | Modest points, maybe 0.5 per $1 | Budget-conscious users who pay in full | High interest if you carry debt |
| Rewards | $150-$399 | Standard rates, 18-24% p.a. | Points per dollar, travel insurance, purchase protection | Everyday spenders who clear the balance | Fee can outweigh points value |
| Frequent Flyer | $199-$450 | Standard to higher rates | Qantas or Velocity points, lounge access, travel credit | Regular domestic and international flyers | High fees, points devalue over time |
| Travel | $0-$99 | Standard rates | No foreign transaction fees, multi-currency | Overseas trips and online shopping | Check ATM and conversion costs |
| Balance Transfer | $0 first year, then around $49-$99 | Standard after promo | Often limited rewards | Consolidating existing card debt | Promo rate reverts, transfer fees apply |
Rates and fees differ between lenders and are changing as banks adjust to the new rules, so treat the figures above as a guide rather than a fixed price list. Many comparison services in Australia update their tables regularly, and it is worth checking the current terms before applying.
Making Your Card Work Harder
There are a few practical steps that apply to almost any cardholder in Australia this year.
First, if you travel overseas or buy from international retailers, a card with no foreign transaction fees is hard to beat. The typical markup on foreign transactions can add up quickly, and many travel-focused cards now include this feature at no extra cost. Pairing it with a multi-currency account for cash withdrawals can stretch your holiday budget further.
Second, pay attention to interest-free days. Most cards offer around 44 to 55 interest-free days on purchases, but only if you pay the closing balance in full by the due date. Used properly, this effectively gives you an interest-free loan for up to nearly two months, which is genuinely useful for managing cash flow around large bills or seasonal spending.
Third, review your card once a year rather than assuming it still fits. Banks in Australia are required to let you know when interest rates change, but fees and rewards changes can slip through quietly. A quick annual review, comparing your current card against what is on the market, can reveal whether you are still getting value for the annual fee.
For those with existing card debt, a balance transfer can be a genuine help. Several cards currently offer zero per cent interest on transferred balances for periods ranging from six months to two years, though most charge a transfer fee around one to two per cent. The key discipline is to have a repayment plan before the promotional period ends, because the rate reverts to a standard cash advance or purchase rate afterwards.
The Bottom Line
The removal of surcharges from October is a genuine win for Australian shoppers, but it comes with a twist. As banks raise fees and trim rewards to recover their lost income, the choice of credit card matters more than it did a year ago. The card that makes sense depends on your spending habits, whether you pay in full each month, how often you travel and whether you carry debt.
Start by working out your own pattern, then compare a few cards in the category that matches it. If you travel regularly, look for travel perks and no foreign transaction fees. If you clear your balance each month, rewards and interest-free days matter most. If you carry debt, prioritise the lowest purchase rate you can find. A little time spent comparing now can save a meaningful amount over the year ahead.
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