How to protect your credit card rewards as CFPB responds to surge in customer complaints


The Consumer Financial Protection Bureau (CFPB) is turning its attention to credit card rewards programs.

The agency is focusing on rewards after consumer complaints about credit card rewards increased 70% since before the pandemic. In May, the CFPB issued a report focusing on common consumer complaints and held a joint hearing with the Department of Transportation on the American Airlines Rewards Program

Target? “Ultimately, we want to make sure that every family gets what's promised and that we do have a fair, competitive and transparent environment [credit card] CFPB Director Rohit Chopra said at the joint hearing.

Here's a closer look at the most commonly cited credit card rewards problems, along with some steps you can take to avoid today's rewards credit card problems.

Here are the CFPB’s most common themes in rewards complaints submitted by cardholders:

Some cardholders say it feels like they are part of a “bait and switch” when they sign up for a card because of an offer on the market, only to never get the promotional rewards – often because of requirements included in the card's terms.

The CFPB calls it an “unexpected promotional condition.” Here are some examples:

  • Offer different bonus offers based on where you apply for the card (specific websites, marketing emails, social media ads, etc.)

  • Discover that you are not actually eligible for a targeted limited time offer

  • Not sure how much the minimum payout counts so you can't earn the bonus

If you've ever owned a travel credit card, you're probably familiar with how depreciating rewards can affect your travel plans. A few recent examples include Delta Air Lines' changes to its SkyMiles program, American Airlines' move to limit members' ability to earn award miles, and the airline's recent shift from standard award charts to dynamic pricing.

These types of changes make it harder to book travel using rewards because the points you've already earned suddenly become less valuable. Credit cards that earn airline miles or points from other travel loyalty programs are a cardinal sin, but devaluation isn't unique to travel rewards.

The CFPB includes changes to any type of rewards program in this category (with little notice), as well as credit cards that have minimum redemption requirements, such that you may only be able to redeem rewards when your cash back balance reaches $25.

“Not only does this create confusion about the true value of the points, it also raises questions about fairness,” said CFPB Director Chopra.

While some cardholders are concerned about the value of their rewards, others simply can't redeem their rewards.

The CFPB report highlights consumers who were put on hold with customer service for hours or waited months for credit card rewards issues to be resolved. When card issuers and travel partners or merchants can't resolve issues with their accounts, some cardholders end up not being able to use their rewards at all.

Other complaints in the report include technical issues with online accounts and portals, and delays in points transfers that prevent them from taking advantage of limited-time travel offers.

The final topic highlighted by the CFPB is lost credit card rewards, noting that “card issuers lose, expire, revoke or otherwise take away hundreds of millions of dollars in reward value each year.”

In some cases, points expire after the account becomes inactive or are lost when the card issuer closes the cardholder's account (whether by choice or not). Issuers can often close accounts without any advance notice, which surprises some consumers.

The CFPB has not taken any action against credit card companies, airlines or other stakeholders in the credit card rewards business. While regulation or enforcement may be key to some issues raised by cardholders, you may also be better prepared to respond to offers that are conditional or unclear forward Any problem you face.

Here are some ways to prevent common rewards issues from affecting the value of your rewards.

Don’t rely on marketing materials to fully understand credit card offers. Be sure to read the terms and conditions to determine if the card fits your budget and spending.

If you're opening a card with an introductory 0% APR, review the details about how long the introductory period lasts, what balance transfer fees may apply, and how the ongoing APR is applied after the introductory period.

For welcome bonus offers, make sure you understand the minimum spending threshold required, the time that threshold must be met, and any restrictions on qualifying purchases that apply to the bonus. Card issuers also often limit how often you can get a welcome offer – for example, if you've received a welcome offer on another card from the issuer within the past 48 months, you may not be eligible for the bonus.

You can find these details in the card terms on your card issuer's website. When you navigate to the card information page, you'll see a link to the document explaining all the offer details. Publishers use different languages ​​when linking to these documents, so look for the following words: Rates and fees, Pricing and terms, Credit information, Quotation terms, Program Termsor Benefit Details.

Sometimes, a card's terms and conditions are separate from the terms of the card's rewards program. Here’s what each item means:

  • Credit Card Terms and Conditions: You'll find standard details like APR, card fees, minimum interest charges, and more here. Issuers are required to organize much of this information in a standardized format. This makes it easier for you to find and compare fees that different cards may incur, interest rates and how long they apply, penalties, how minimum payments are calculated, and other details.

  • Rewards Program Terms: You may find details specific to the bonus offer in the card's general terms document, or listed as a separate document on the card issuer's website. Here you will find important details about bonus offers that may not be listed elsewhere. This includes eligibility requirements, a list of purchases that don't count toward the offer, expiration details, how to make sure you qualify, and more.

One of the best defenses against losing credit card rewards is to use points. Just like the cash under your mattress won't grow in value, the points and miles left in your account won't become more valuable long-term.

Given the widespread use of dynamic award pricing in airline and hotel loyalty programs, the number of points or miles required to get the redemption you want can change quickly — and there's no guarantee you'll find a better redemption rate in the future.

There are even more reasons to use your points regularly. If your card does have an expiration policy that you're unfamiliar with, using your points can ensure they don't expire before you can redeem them. It also prevents you from losing a large amount of points if you close your account, or points that may become inaccessible if there are any issues with your account.

Consider setting reward goals when you earn rewards. For example, if you're planning a big international trip this summer, wait until a few months ago to open your travel card so you can reach the required spending threshold and earn the welcome bonus.

Then, once you're ready to book your trip, you can redeem it for cash.

If you're infuriated rather than excited by the idea of ​​figuring out how to get the best value for your points, consider this when comparing rewards credit cards.

The devaluation and uncertainty of points and miles can complicate the process for anyone—whether you're a seasoned travel rewards user or looking for your first rewards card.

Cash back credit cards are probably the easiest option. Unlike many points and miles rewards, cash back is a fixed currency, so you always know exactly how much you need to redeem at any given time. To make it as simple as possible, you can even choose a card that earns flat cash back, like the Capital One Quicksilver Cash Rewards Credit Card or the Wells Fargo Active Cash® Card.

Rewards cards that earn points for a flexible rewards program (as opposed to an airline or hotel program) may also offer some stability—though you'll still need to read the card agreement and understand the value of each redemption option.

For example, American Express publishes a rewards calculator that you can use to calculate exactly how much your Membership Rewards points are worth based on different redemption options. You can also differentiate these bonus values ​​based on which card you own, such as the American Express Gold Card or the American Express Platinum Card.

Take Chase, for example. Chase Ultimate Rewards points you earn with the Chase Sapphire Preferred® Card and Chase Sapphire Reserve® are each worth 1 cent when you redeem them for cash or gift cards (as described in the card's rewards program agreement). But when you use points to book travel through Chase Travel, their value will increase by 25% or 50% respectively. This means that no matter what points you redeem with Chase Travel, they are worth 1.25 cents and 1.50 cents respectively.

If you do want to continue earning points and miles for your preferred airline or hotel program, the best way to get the most value for your points is to keep your travel plans open.

If you decide to fly at a specific time on a specific date, or if you can only travel during a holiday weekend, the value of the award you receive when booking may be reduced. But if you don’t mind flying during off-peak hours or delaying your hotel stay until a few days after your vacation, you may find that your options are wider.

When airlines and other travel programs devalue their rewards across the board, there's not much we as consumers can do. But keeping a flexible schedule can at least help you save money and get the most value possible from your rewards card.

The CFPB's focus on rewards is one of several credit card topics the agency has discussed recently.

One of the big concerns is interest rates, as Americans currently owe more than $1 trillion in credit card debt. In recent reports and in joint hearings with the Department for Transport, regulators have raised issues of rate competition and transparency. The CFPB notes that the largest credit card companies tend to offer the highest interest rates, while lower rates are more common at smaller banks and credit unions. Additionally, the highest interest rates are often found on popular rewards cards, while cards with lower interest rates are typically less well-known (and less marketed) non-rewards cards.

The CFPB also recently ruled that buy now, pay later (BNPL) companies are credit card companies and consumers have the same protections when using them as when using a credit card. BNPL lenders are now required to regularly share statements with users. If you purchased through BNPL, you have the right to dispute the charge and receive a refund upon return.

The editor of this article is Alicia Hahn


Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. Financial product details, including card rates and fees, are accurate as of the date of publication. All products or services are provided without warranty. Check your bank's website for the latest information. This website does not include all offers currently available. A credit score by itself does not guarantee or imply approval of any financial product.



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