If you've ever booked a “free” flight using your airline miles, you’ve quietly benefited from one of the most misunderstood financial systems in travel: the high-fee credit card partnership between airlines and banks. These cards promise perks—upgrades, early boarding, lounge access—but their engine is a little-known cost passed on to merchants: swipe fees. Now, that invisible engine may be on the verge of breaking down.
Legislation in the US, consumer protection pushes in Australia, and quiet murmurs in the UK and parts of Asia are all putting pressure on this model. If these swipe fees are capped or restructured, your favorite points programs—and the way you plan for travel—might never look the same. This isn't panic territory. But it is planning territory. Because what’s changing isn’t just card perks. It’s the reward structure you’ve built your free travel habits around.
Let’s start at the beginning: When you swipe a premium airline-affiliated credit card at a store or online, the merchant pays a small fee to the payment network—usually Visa, Mastercard, or Amex. This is known as the interchange fee. For travel and premium cards, this can range from 1.5% to 3% of the transaction amount.
That fee doesn’t go to the airline directly. It gets routed through the card issuer (usually a bank), who then uses some of that money to buy miles in bulk from the airline. This is how your bank can afford to give you 2x or 3x miles per dollar spent. What’s in it for the airline? A predictable revenue stream that isn’t tied to ticket sales. In fact, some major US airlines now earn more from selling miles to banks than from flying passengers. This makes the airline less reliant on seat sales—and more interested in keeping you inside its card ecosystem.
According to filings from Delta, United, and American Airlines, the revenue from selling miles to banks now exceeds billions annually. For example:
- Delta earned over $7 billion in 2023 from its American Express partnership.
- United’s deal with Chase netted roughly $5.5 billion that same year.
- American’s co-branded partnership with Citi and Barclays topped $6 billion.
These numbers matter because they reveal something essential: Airlines aren’t just in the transportation business anymore. They’re in the loyalty business. Your points aren’t just a perk. They’re a product. If credit card fee caps reduce this revenue stream, airlines may no longer have the incentive—or the profit margin—to keep your rewards as generous.
So why fix what’s working? From a policy standpoint, high swipe fees are seen as anti-competitive. Retailers—especially small ones—pay higher transaction costs when customers use premium rewards cards. These fees are typically non-negotiable and can eat into already thin margins. Regulators in the US have introduced the Credit Card Competition Act, which aims to allow retailers to route transactions through lower-cost networks. In Australia, similar reforms capped interchange fees over a decade ago. The EU has also limited these charges since 2015.
What do these regions now have in common?
- Lower credit card fees for merchants
- Fewer luxury credit card perks for consumers
- Reduced availability of large sign-up bonuses and free flight opportunities
In short, cutting fees may increase fairness at the point of sale—but it risks gutting the reward economy for travelers.
If swipe fees are cut in major markets, banks will likely pass that revenue loss back to consumers and partners. Here’s how that trickles down:
1. Fewer Miles Per Dollar
Expect to see your earnings reduced. A card that once gave you 3x on dining and travel might cut that to 1.5x or 2x to stay profitable.
2. More Blackout Dates
Airlines may increase award flight restrictions. More “miles required” for off-peak tickets. Fewer seats available during school holidays or holidays.
3. Higher Annual Fees
To maintain perks, banks might raise the annual cost of premium cards. This is already happening in the US, with many cards pushing past $500/year.
4. Shrinking Transfer Value
Programs like Chase Ultimate Rewards or Amex Membership Rewards may devalue their airline transfer ratios—from 1:1 to 0.8:1, for example.
5. Loss of Travel Insurance & Perks
If banks need to trim costs, benefits like travel delay insurance, baggage protection, and lounge access may be the first to go. These aren’t just theoretical shifts. They’ve already happened in Australia, where once-generous Qantas and Velocity cards are now more aligned with basic cashback offerings than aspirational travel benefits.
Even if you’re not a heavy traveler, the logic of points-based travel cards touches your planning. Let’s reframe your approach using a three-tier strategy lens:
Tier 1: Active User
If you fly regularly with one or two airlines, still benefit from free bags, and use rewards for frequent redemptions—then these cards still have value for you. But watch for earnings drops and redeem earlier, not later.
Tier 2: Flexible Traveler
If you’re brand-agnostic and only fly a few times a year, consider shifting to flexible points platforms like Citi ThankYou or Amex Membership Rewards. These offer airline transfers and hotel redemptions—but with broader usage options.
Tier 3: Cashback Seeker
If you rarely fly or don’t want to track redemption systems, go with a flat-rate cashback card. Especially as points programs tighten, simple rewards will often outperform devalued airline miles.
Yes—but cautiously. Singapore’s credit card ecosystem mirrors US trends in terms of airline partnerships, high-tier rewards, and bank-miles relationships. Banks here rely on merchant fees to fund sign-up bonuses and “spend $X to earn Y miles” promotions. If global regulators successfully cap fees in one or more large markets, international banks may preemptively adjust card economics across all geographies. That includes Asia.
We’ve already seen early signs:
- Fewer 100,000-mile sign-up bonuses in Singapore since 2022
- Tighter spending thresholds and accelerated tier expirations
- Fewer no-annual-fee first-year options
Malaysia and Thailand, with smaller travel card penetration, may follow a similar path but with fewer premium products to cut.
This isn’t about panic-selling your points. It’s about clarity. These questions will help you decide if your current strategy still fits your lifestyle:
1. Am I actually using the points I’m earning?
Many people hoard miles but never redeem them efficiently. If you haven’t used your rewards in the last 18 months, you may be overpaying on annual fees.
2. Do I understand my redemption ratios?
Some cards make it hard to see true value. A point might equal 1 cent—or just 0.6 cents. If you’re unsure, check how many points it takes to redeem a $100 flight.
3. Would I buy this benefit out of pocket?
Free bags, lounge access, or early boarding might sound great. But if you wouldn’t pay $500/year for them, the card may not be delivering real value.
4. What happens if the rewards program halves its value next year?
Would you still hold the card? Or would you feel stuck? If your loyalty depends on an economic illusion, your strategy may be outdated.
If the legislation passes—or if other markets follow Australia’s lead—here’s how to adapt without overhauling your financial habits:
- Use up your miles before major devaluations. They’re not a savings account.
- Switch to cards with flexible redemption platforms. They offer buffer against airline-specific cuts.
- Rebalance travel and cashback rewards. Consider having both types in your wallet, depending on spend category.
- Reframe your goal. Travel rewards used to feel like a financial hack. Now, they should be seen as a planning layer—not a profit source.
This isn’t the end of points. It’s a reset in how they’re funded and what they’re worth. For years, travel hackers taught us to think of points as a game: spend strategically, redeem lavishly. But for the financially grounded, the goal was always clarity—not just freebies.
What matters now is whether your spending behavior, travel goals, and card choices still line up in a world where the old math is changing. Don’t drop your miles card in a panic. But do reframe it. Use it for what it still delivers. And know when to walk away. Because your smartest travel plans should buy freedom, not just flights.
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