With last week's launch of a new range of Commonwealth Bank credit cards, all four big banks now have American Express companion cards as a part of their reward packages.

Consumers are being encouraged to hold two cards, a Visa or MasterCard and an Amex, to operate one account.

Companion cards are all about maximising reward points. The rationale is Amex can offer more points, with the rate of accumulation as much as three times greater, because it is able to pass on its costs through higher merchant service fees.

Earlier this decade, the Reserve Bank said banks issuing Visa and MasterCard were charging each other too much for card services and were not subject to competition. It also said the fees banks charged shop owners and other merchants were too high.

In 2002 it regulated this pricing and cut Visa and MasterCard merchant service fees in half. Amex and Diners were not covered by the new rules.

Recent Reserve Bank data on merchant fees for credit and charge cards shows Visa and MasterCard are charging 0.82 per cent of the value of a transaction, while Amex is charging 2 per cent and Diners 2.1 per cent.

With its new dual cards, Commonwealth is offering one reward point for every dollar spent on MasterCard, 1.5 points a dollar on standard Amex, two points a dollar on gold Amex and three points a dollar on platinum Amex.

New customers signing up for a credit card and the Commonwealth Awards Program will be issued with a MasterCard and an Amex card. Existing customers can request an Amex card. They operate as one account, are covered by a single annual fee and points go into one awards program.

The programs offered by the other big banks work in the same way, although the points vary. Westpac offers three points a dollar spent on its Altitude Platinum Amex card and one point a dollar on its companion, Altitude Platinum Visa.

National Australia Bank offers two points a dollar on its Qantas Platinum Amex and 0.67 of a point on its companion Qantas Platinum Visa.

ANZ offers 1.5 points a dollar on its Frequent Flyer Platinum Amex and half a point on its companion Frequent Flyer Platinum Visa.

The reason for having two cards is that although Amex is able to offer more points, it does not have the acceptance levels of Visa or MasterCard.

So far, the only credit card issuers with Amex companion cards are the big four banks. American Express confirmed it has network partnership arrangements with the big four but would not comment on whether such arrangements would be offered to smaller banks, credit unions and building societies.

The accompanying table, prepared by InfoChoice, shows the impact of faster points accumulation. Commonwealth Bank reward program members need 16,200 points to redeem a $100 store voucher. The members would need to spend $16,200 to redeem the voucher if they were using only a MasterCard but just $5400 using only their Amex card.

The table shows there is a wide variation in the reward outcomes of the different offerings. Some deals require more than double the spend of others to achieve the same reward.

Annual fees vary a great deal, ranging from $59 to $95 for a standard card and $250 to $295 for a platinum card. Consumers have to keep in mind they get no net benefit from their rewards program until the value of rewards exceeds the cost of the annual fee.

The principal of credit card consultancy MWE Consulting, Mike Ebstein, says consumers need to be aware there tends to be a strong correlation between high potential points and a lack of flexibility in rewards. “Consumers happy with reward vouchers for use with one retailer may earn more rewards faster but lack the scope of rewards available through other programs,” he says.

A financial analyst with Canstar Cannex, Peter Arnold, is positive about companion cards. In a recent review of reward programs, he said: “Using your Amex card means you can earn up to three times as many points. However, you also have the option of pulling out your MasterCard or Visa at places that do not accept American Express.”

Which card suits you?

How much do I spend each year? With platinum card fees close to $300 a year, consumers need to be sure they will accumulate enough points to cover the cost of the fee.

How much do I fly? Frequent travellers get best results from an airline program and should choose a card that links them to that program.

Do I often pay interest on my card? Card holders who usually pay less than the full account balance each month may be better served with a low-fee or low-rate card.

How much flexibility do I want when choosing rewards?

How much am I prepared to change my behaviour to maximise rewards?

Source: MWE Consulting